Jarred Consulting

On 12 June the government issued further details of the flexible furlough scheme which will commence on 1 July 2020 and run until the end of October 2020. The revised, flexible scheme allows employees to work for their employer on a part-time basis whilst employers will still be able to make claims under the Coronavirus Job Retention Scheme (‘CJRS’) for the periods that employees are not working. Flexible Furlough Scheme On 12 June the government issued further details of the flexible furlough scheme which will commence on 1 July 2020 and run until the end of October 2020. The revised, flexible scheme allows employees to work for their employer on a part-time basis whilst employers will still be able to make claims under the Coronavirus Job Retention Scheme (‘CJRS’) for the periods that employees are not working. What restrictions are there to an employer’s use of the revised scheme? Employers can bring furloughed employees back to work for any amount of time and any work pattern, whilst still being able to claim the CJRS grant for the time not worked. However, employers can only claim a CJRS grant for employees who have already been the subject of a successful claim as the employee must have been furloughed for at least 3 consecutive weeks taking place any time between 1 March and 30 June 2020. The number of employees that the employer can therefore claim for in any single claim period from 1 July cannot exceed the maximum number of employees that they claimed for under a previous claim plus any employees returning from family leave (see below). What about employees returning from family leave? An exception has been made to the rule that an employee must have been previously furloughed before 10 June for employees returning from family leave after 10 June even if they are being furloughed for the first time. This exception applies on the basis that:

• The employer must have previously submitted a CJRS claim for other employees in the organisation relating to a furlough period of at least 3 consecutive weeks between 1 March 2020 and 30 June.
• The employee to be furloughed for the first time must have commenced maternity, shared parental, adoption, paternity or parental bereavement leave before 10 June and returned after 10 June.
• The employee must have been on the employer’s PAYE on or before 19 March 2020.

How does an employer agree flexible furlough arrangements with employees? The employer will need to agree this with the employee (or reach collective agreement with a trade union) and retain a new written agreement that confirms the new arrangement and which clearly sets out the hours the employee will work. Is there a minimum furlough period? From 1 July, this minimum three week period will cease to apply and new flexible furlough agreements can last any amount of time. Employees can also enter into a flexible furlough agreement more than once. What hours can the employee work? From 1 July employers can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim under the CJRS scheme for the hours not worked. How can an employer make a claim? It is important to remember that any claims for periods starting before 1 July must end on or before 30 June, even if the employee who is furloughed in June continues to be furloughed in July (in which case separate claims will need to be made). Employers will have until 31 July to make a claim for the periods up until 30 June. Whilst there is no minimum period of furlough, the minimum period of a claim must be 7 days after 1 July. Payments will be made 6 working days after the employer has submitted the claim and therefore this will need to take into account if the employer is making the claim prior to running the payroll. The claim can still be made up to 14 days before the claim period ends. What Information does the employer need to make the claim? In addition to the information currently needed to make a claim, from 1 July the employer will also need to provide:

• the number of usual hours the employee would work in the claim period
• the number of hours the employee has or will work in the claim period

The employer will also need to maintain a record of the number of furloughed hours the employee has been furloughed in the claim period. What records should the employer maintain and for how long? As we have stated before the written agreement between employer and employee must be kept for a period of five years. Please note however that records of the number of hours an employee has worked and the number of hours on furlough should be retained for 6 years. What if an employer makes a mistake with regard to the claim? If an employer claims in advance and the employee works for more hours than the employer has claimed some of the grant will need to be paid back to HMRC. Employers will be able to tell HMRC about any over-claimed amount as part of their next claim so that payment will be adjusted to take account of the previous error. If an employer has made an error that has resulted in an under-claimed amount, then they should contact HMRC to amend the claim. It is worth reminding you that HMRC has, unsurprisingly, warned it intends to impose penalties on directors who don't abide by the rules of the CJRS. Draft legislation has now been published which outlines plans to recover payments made under the CJRS and the Self-Employment Income Support Scheme that claimants were not entitled to. HMRC has also warned of penalties for "deliberate non-compliance", including where partners in a firm were not aware that another partner had made a claim under the scheme. The principle of directors being "jointly and severally" liable for a penalty will apply on the basis that partners are taken to know what other partners know. How are the financial arrangements changing under the flexible furlough scheme? From 1 August, employers will need to make contributions towards wages of furloughed staff and those contributions will increase as follows (although employees will continue to receive 80% of their current wages, up to £2,500 per month):

• For the month of August, the government contribution towards wages will remain at 80% (subject to the cap) however employers will be required to contribute employer national insurance and pension contributions.
• In September, in addition employers will also be required to contribute 10% of wages and the government will contribute 70%.
• In October the employer contribution will increase to 20% with the government contributing 60%.

What action should we be taking now? You should review your existing agreements with employees and determine what new agreements need to be put in place in order to comply with the scheme changes, particularly if you are “topping up” wages (a decision which you may need to review). Remember, any new flexible furlough working arrangements must be agreed with employees and that agreement confirmed in writing. Start to plan your resource requirements, and remember that you can agree any shift pattern with employees. Where can we find further details? For further information please go to: https://www.gov.uk/guidance/calculate-how-much-you-can-claim-using-the-coronavirus-job-retention-scheme If you have any questions on any of the details in the update, please get in touch. Many thanks to our associate Euan Graham for keeping us up to date.