COVID19: Coronavirus Job Retention Scheme: 10 June cut off and ‘flexible furloughing’ from July

Chancellor of the Exchequer Rishi Sunak has outlined further details on how the government support for employers will operate during the easing of lockdown measures and as the government encourages employees to return to work.

At present, furloughed employees are unable to work for their employer while on furlough, but, from 1 July 2020, flexible furloughing will be permitted. More guidance is due to be published on 12 June 2020. In the meantime, the government has produced a fact sheet that covers the Coronavirus Job Retention Scheme (CJRS) and the extension to the Self-Employment Income Support Scheme – we have outlined this below.

Furlough 2020 timeline

10 June	Last date on which an employee can be furloughed for the first time to be eligible for a claim to be made under the CJRS from 1 July.
30 June	CJRS will close to new entrants.
1 July	Claims restricted to employers currently using the scheme and “previously furloughed employees”. Flexible furloughing commences. Employers will be able to bring furloughed employees back to work part-time.
1 August	A new taper will start to operate requiring employers to meet part of the salary and other costs previously covered by the CJRS

Closing the scheme to new entrants on 30 June

To enable the introduction of flexible furloughing, from 1 July onwards will be restricted to employers currently using the scheme and previously furloughed employees. This means that the final date by which an employer can furlough an employee for the first time will be 10 June in order for the current minimum three-week furlough period to be met.

From 1 July, employers will only be able to furlough employees that have been furloughed “for a full three-week period” prior to 30 June.

Employers will have until 31 July to make any claims in respect of the period prior to 30 June.

Flexible furloughing from 1 July

It had previously been thought that flexible furloughing would not be permitted until August, but the government has now confirmed that this will be available for eligible employees from 1 July. Employers will be permitted to decide the hours and shift patterns their employees will work on any part-time return, “so that they can decide on the best approach for them”. Employers will be responsible for paying an employee’s salary while working in accordance with their employment contact.

Further guidance will be published, but the announcement and accompanying fact sheet provides that:

The minimum period for a claim for a grant to cover the employee’s furloughed hours (that is, the hours the employee is not working by reference to their usual hours) will be a minimum of one week.
Employers must agree with their employee any new flexible furloughing arrangement “and confirm that agreement in writing”.
To claim the grant, employers will need to report to HMRC the hours an employee works and the usual hours an employee would be expected to work in a claim period.
From 1 July, claim periods will no longer be able to overlap months, but employers can continue to make claims in anticipation of an imminent payroll run, at the point payroll is run or after the payroll has been run.
The number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim under the current CJRS.

Employers will be able to make their first claim under the new scheme from 1 July 2020.

Employers asked to contribute a ‘modest share’ from 1 August 2020

From August 2020 the level of government grant will be slowly tapered with employers being required to contribute towards the costs of furlough, but furloughed employees will continue to receive 80% of salary (subject to the £2,500 cap) for their furloughed hours

Month 2020	Government contribution	Employer contribution	Flexible furloughing permitted?
June	80% of wages up to cap of £2,500 plus employer’s National Insurance and employer’s minimum automatic enrolment pension contributions on that amount.	No contribution	No
July	80% of wages up to cap of £2,500 plus employer’s National Insurance and employer’s minimum automatic enrolment pension contributions on that amount.	No contribution	Yes
August	80% of wages up to a cap of £2,500.	Employer’s National Insurance and employer’s minimum automatic enrolment pension contributions.	Yes
September	70% of wages up to a cap of £2,187.50.	Employer National Insurance and employer’s minimum automatic enrolment pension contributions. and 10% of wages to make up 80% total up to a cap of £2,500.	Yes
October	60% of wages up to a cap of £1,875.	Employer National Insurance and employer’s minimum automatic enrolment pension contributions. and 20% of wages to make up 80% total up to a cap of £2.500.	Yes

The government’s fact sheet states that the cap will be proportional to the hours not worked. Further guidance should provide more information on how this will work in practice, we are expecting this to be released this Friday. As with the current scheme, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.

Next Steps to be taken

You will now need to consider whether (if appropriate) any of your employees should be furloughed prior to 10 June to enable them to qualify for claims under the scheme from 1 July onwards. Careful thought will also need to be given to how flexible furloughing can support your business from July through to October.

Consultation and agreement with employees will be crucial, particularly as many children will still require care at home and the government, so far, has made only tentative moves to ease measures for those who are shielding. Employers will also need to ensure that that they have systems in place to accurately record hours for the purposes of flexible furloughing. More guidance is due to be published on 12 June 2020 and we will be able to provide you with a more comprehensive update then.

Click here for the HMRC Factsheet direct (CJRS Factsheet from second page onward)

Your account should be able to help you if you have any questions.

HB Accountants are accountants for business. For financial and accounting guidance and support, please contact Keith or Karen. We’re still working hard for all our clients to help you make the right decisions.

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