Flexible Furlough Scheme - CJRS V2
Flexible furlough scheme open 1 July 2020.
Employers will be able to make claims for grants under the flexible furlough scheme (CJRS V2) from 1st July. This blog highlights the key points and areas where we are still awaiting further details.
The first version of the Coronavirus Job Retention Scheme (CJRS), whereby employees had to be furloughed full time, ends on Tuesday 30 June 2020 and the deadline for claims is 31 July 2020.
Before HMRC published its full guidance there were suggestions that employers would have to make a CJRS V1 claim by 30 June 2020 to qualify to receive CJRS V2 grants. This is not the case; all businesses have until 31 July to claim CJRS V1 grants.
Key changes for CJRS V2
CJRS V2 is only available to employers that have made claims for grants under CJRS V1.
CJRS V2 is only available for employees that were furloughed under CJRS V1, with some exceptions for employees returning to work after parental leave and military reservists.
For CJRS V2 there is a new limit to the number of employees who can be included in a single claim. This is set at the maximum number ever claimed for in a single claim for that payroll in CJRS V1.
Employees can be flexibly furloughed, enabling part-time working. For example, an employee could work on Monday and Tuesday and be furloughed on Wednesday, Thursday and Friday. The cap on the furlough grant will be proportional to the hours not worked.
There is no minimum furlough period.
Where flexible furlough is being used, there are additional record keeping requirements and employers are required to retain (for six years) records of the usual hours worked by each employee (including details of the calculation used to ascertain usual hours) and the actual hours worked.
Furlough claims must contain details of usual hours and actual hours worked. Furloughed hours is the difference between these. Unfortunately, HMRC has not yet responded to requests for clarification of how usual hours should be calculated.
Each claim made by an employer must be for a week or more unless the claims for an ‘orphan period’ at the beginning or end of a month.
No claim period can extend across a calendar month end which in some cases will mean that pay periods will have to be split with separate claims for different parts of the pay period.
30 November 2020 is expected to be the final date for submitting claims under CJRS V2.
Change to the financial support available to employers
From 1 August 2020, the monthly cap on the furlough grant will remain at 80% of employee wages capped at £2,500 but employers will be required to meet the cost of employer NICs and pension contributions.
From 1 September 2020, employers will also have to pay 10% towards an employee’s wages (resulting in the monthly cap on the furlough grant reducing to £2,187.50).
From 1 October 2020, an employer’s contribution towards an employee’s wages will increase to 20% (resulting in the monthly cap on the furlough grant reducing to £1,875).
The furlough scheme will end on 31 October 2020.
What should employers be doing now
Employers - particularly those benefiting from the easing of restrictions - should give careful consideration to what their staffing requirements will be from 1 July and how that will impact the employees they currently have on furlough:
Employers who intend to keep employees on full furlough will need to review their existing arrangements to see whether any further agreement is required and whether employees need to be notified of their intention to extend furlough. If you offer a “top-up”, you may also need to consider whether it is affordable to do so an extended basis (particularly as you will be required to contribute more to the scheme).
If you are going to use the flexible furlough scheme, you will need to put in place a new agreement and take on board the time it will take to work through the complex calculation requirements. Also remember there are new record-keeping requirements in this scenario.
If alternative arrangements (e.g. new furlough rotations) are to be put in place, those will most likely also need new agreements.
For further guidance specific to your own circumstances, we recommend meeting with an accountant. For more information and advice, get in touch with Catherine today. Give her a call on 01423 431889 or email email@example.com.