Flexible Furlough Guidance
The Coronavirus Job Retention Scheme (CJRS) is changing, and as of 1 July 2020 it will incorporate a degree of flexibility to allow employers to bring workers back to work part time, while remaining furloughed part time.
The table below outlines the flexible month by month changes to the CJRS as liability for wages and associated employment-related costs moves gradually back to the employer.
Employers should note that small businesses may be eligible for the Employment Allowance, which could cover their ER NICs liability, see information and eligibility criteria here.
Only those workers who have completed a full three-week furlough on or before 30 June 2020 are eligible to be furloughed, either fully or flexibly, after 1 July 2020. The exceptions to this rule are those workers who return from family leave (maternity, paternity, adoption, shared). Such workers can be furloughed for the first time upon their return from leave.
From 1 July 2020 an employer can, with agreement from their workers, use a CJRS grant to pay part of a worker’s wages while that worker returns to work on a temporary part-time basis. The worker will be paid at 100% of normal wages for the hours they work and paid at least 80% of normal wages for the hours which they spend on furlough.
Also from 1 July 2020, a new limit to the number of staff who can be included on a claim will be introduced, based on the maximum number of staff ever included in any single pre-1 July claim. From 1 July 2020, claim periods will no longer be able to overlap months.
From 1 July 2020, there will be no minimum length of furlough period, although claims made through the CJRS portal must be made in respect of at least 7 calendar days. This gives employers the flexibility to increase or decrease their available workforce in line with their planned work pipeline.
Workers can continue to book and take annual leave while flexibly furloughed, and by the same token, an employer can ask workers to take annual leave with appropriate written notice.
Before making a claim to the CJRS for a worker who is on flexible furloughed, the employer must first have agreed the flexible furlough arrangements in writing with each employee.
To make a claim, the following are needed:
- to be registered for PAYE online
- the employer’s UK bank account number and sort code
- the billing address on the employer’s bank account
- the employer’s PAYE scheme reference number
- the number of employees being furloughed
- each employee’s National Insurance number
- each employee’s payroll or employee number (optional)
- the start date and end date of the claim:
- employee wages
- employer National Insurance contributions (for claims up to 31 July)
- employer minimum pension contributions (for claims up to 31 July)
- the employer’s phone number
- contact name
- the number of usual hours the worker would work in the claim period
- the number of hours the worker has worked (or will work) in the claim period
- a record of the number of furloughed hours your employee has been furloughed in the claim period
Employers also need to provide either:
- their name
- Corporation Tax unique taxpayer reference
- Self Assessment unique taxpayer reference
- company registration number
HMRC has provided a handy calculator tool here to assist employers in working out what they need to pay when using flexible furlough.
The first time employers can make a claim for any days of furlough in July will be 1 July 2020. When making a claim using the HMRC’s online portal it is now possible to save the claim application part-way through, and return to complete it within seven days.
If you have received either an overpayment or an underpayment in your CJRS grant due to an error on your part, you must communicate this to HMRC through your next CJRS grant application. If you’ve been overpaid, your next grant payment will be reduced to reflect this. If you’ve been underpaid, additional checks may be required before a balance is paid to rectify the shortfall.
As has previously been the case when furloughing a worker, on each occasion you must gain written agreement to the arrangement and retain this for at least six years. With effect from 1 July 2020, when moving to a part-time furlough arrangement, this can only be done after having gained written agreement from each worker to temporarily vary their hours due to coronavirus.
You can use the standard letter provided by SELECT here to inform your workers of the proposed new arrangements, and to request their consent.
You should keep records of the usual working hours of each worker you claim for, and the hours of work they completed versus the hours you intend to claim for through the furlough grant. This information will be required when making a part-time furlough claim.
Once you’ve claimed, you’ll get a claim reference number. HMRC will then check that your claim is correct and pay the claim amount by BACs into your bank account within 6 working days.
- keep a copy of all records for six years, including:
- the amount claimed and claim period for each employee
- the claim reference number for your records
- your calculations in case HMRC need more information about your claim
- for employees you flexibly furloughed, usual hours worked including any calculations that were required
- for employees you flexibly furloughed, actual hours worked
- tell your employees that you have made a claim and that they do not need to take any more action
- pay your employee their wages, if you have not already
You must pay the full amount you are claiming to your employee and pay the associated employee tax and National Insurance Contributions, even if your company is in administration.
If you’re not able to do that, you’ll need to repay the money back to HMRC. The same applies in relation to employer NICs and pension contributions you claim regarding your employee. The full amount you claim in respect of these must be paid or you will need to repay the money back to HMRC.
If you had previously applied for the Coronavirus Job Retention Scheme and you had been rejected due to not being up to date with payments of tax liabilities, you may now be accepted if you apply again.
The HMRC have admitted that outstanding tax liabilities should not have been grounds to refuse an application to the scheme and will consider previously refused applicants again if a fresh application is received.