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The CJRS, flexible furlough and the importance of getting it right

19 June 2020

New Government guidance on flexible furlough published and new HMRC enforcement powers announced

As the UK attempts to emerge from lockdown and to get the economy moving once again, the Government has published guidance on upcoming changes to the Coronavirus Job Retention Scheme (CJRS). These changes aim to provide employers with the flexibility to bring employees back to work part-time while retaining some level of support for employment costs.  

From 1 July the CJRS will be much more flexible and, perhaps inevitably, much more complex than before. From that date, employers will be able to bring furloughed employees back to work for any amount of time and on any work pattern, whilst still being able to claim a grant for the hours not worked. For example, an employer and employee can agree that the employee will return to work three days a week and remain furloughed for two. Similarly, an employee could work each morning and be furloughed each afternoon. 

Agreed flexible furlough arrangements from 1 July can last any amount of time (as opposed to the minimum three consecutive week period required under scheme up to 30 June). However, when claiming funds from the CJRS the minimum claim period will be 7 calendar days (unless employers are claiming for the first few days or the last few days in a month). 

For the non-working hours, the employee is furloughed and will continue to be prevented from making money for or providing services to their employer (or any organisation linked to their employer). Employees can however continue to take part in training, volunteer for another employer or organisation or work for another employer during furloughed hours, if that is contractually allowed. 

To be eligible, an employee being furloughed from 1 July must have been furloughed for a period of 3 consecutive weeks prior to this date, at any time between 1 March and 30 June. The last day an employee could start furlough leave for the first time was 10 June. However, the Government has announced that the 10 June cut off date will not apply to those who return to work after that date following a period of statutory maternity, paternity, adoption, shared parental or parental bereavement leave.

Agreeing flexible furlough with employees

The guidance makes clear that employers will need to agree new flexible furlough arrangements with employees or their trade unions (where a collective agreement is in place) and ensure that the agreement is confirmed in writing. This written confirmation should be kept for five years. Employers should also keep careful records of worked hours and furloughed hours in each calendar month.  

Please see our previous articles on the importance of recording the furlough agreement and the risk of claims entailed in furloughing staff which remain of relevance.

Making a flexible furlough claim

The Government has published a number of updated guidance documents which take employers through the technical aspects of making a claim, including worked examples, such as this example calculation for an employee on fixed hours who returns to work for half days. 

In very simple terms, in July employers will be able to claim 80% of pay for each furloughed hour, along with employer NICs and pension contributions in relation to those furloughed hours. The wage cap of £2,500 still applies, but is proportional to the hours an employee is furloughed. For example, the wage cap for an employee who is furloughed for 60% of their normal hours will be 60% of £2,500.  

Because these changes will take effect from the beginning of July, employers cannot make a claim under the flexible furlough arrangements until 1 July. Claims must relate to periods falling within the same calendar month to take into account the month-by-month changes to the scheme from August to October (see below). It is also important to note that claims for any period before the end of June must be made before the end of July.

Upcoming changes

From 1 August, employers will not be able to claim employer NICs or pension contributions but will still be able to claim for 80% of wages for furloughed hours (subject to a pro-rated £2,500 monthly wage cap). From September, support for wages will reduce to 70% of pay for furloughed hours (subject to a pro-rated £2,187.50 wage cap) but employers must top up pay to 80% or £2,500 (whichever is the lowest). From October, support for wages will reduce again to 60% of pay for furloughed hours (subject to a pro-rated £1,875 wage cap). The furlough scheme will end on 31 October 2020.

Further detail of these changes can be found in our previous article.

The importance of getting it right

The new calculations are complex and where possible employers are advised to use the Government’s online calculator. If employers cannot use this calculator for any reason they are advised by HMRC to work out what they can claim manually using the calculation guidance or by seeking professional advice from an accountant or tax adviser.

It is the employer’s responsibility to check that the amount its claiming for is correct. Because of this it is important to keep for 6 years copies of calculations and the basis upon which calculations are made so that employers can support the decisions made should HMRC audit the claims. 

New HMRC powers to reclaim overpayments under the CJRS

The Government intends to bring in new HMRC enforcement powers in relation to fraudulent and inaccurate claims under the CJRS in the upcoming Finance Bill. If passed, the new legislation will give HMRC the power to apply income tax of up to 100% on payments under the scheme where it finds that employers were not entitled to the payment or where the payment has not been used to pay furloughed employee costs. HMRC will also be able to charge a penalty in cases of deliberate non-compliance. The penalty will only apply if the employer fails to notify HMRC about the non-compliance within 30 days. Company officers can be made jointly and severally liable for the charge to tax if they are found to be culpable for making a deliberately false claim under the scheme.

If you would like to discuss any aspect of this article further, please contact and or any other member of the employment team on 0113 244 6100.

You can also keep up to date by following Wrigleys employment team on Twitter @Wrigleys_Em

The information in this article is necessarily of a general nature. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors. 




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