On 12 June the UK Government issued details of the flexible furlough arrangement which will operate from 1 July 2020. The new scheme will allow employees to work for their employer during some of the period and the employer will still be able to claim under the scheme in respect of the time where employees are on furlough.
Existing guidance has been updated and new guidance notes and examples have been published to cover the new flexibility.
What restrictions are there to an employer’s use of the scheme?
From 1 July employers can bring furloughed employees back to work for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked. It is important to note that an employer can only claim a grant under the scheme in respect of employees that the employer has successfully claimed a grant for previously. This means the employee must have been furloughed for at least 3 consecutive weeks taking place any time between 1 March and 30 June 2020, although there is an exception for employees who are returning from statutory family leave (see below). The number of employees that the employer can therefore claim for in any single claim period starting from 1 July cannot exceed the maximum number of employees that the employer claimed for under any claim ending by 30 June plus any employees returning from family leave.
How can an employer agree to furlough employees?
The amended guidance makes it clear that when agreeing to flexibly furlough employees the employer will need to agree this with the employee (or reach collective agreement with a trade union) and keep a new written agreement that confirms the new furlough arrangement. The previous guidance was clear that the agreement had to be consistent with employment law, but now extends this to confirm that the employer must consider equality and discrimination law. The amended guidance for the period after 1 July excludes the provision which states that the employee does not have to provide a written response. In practice an employer should seek to reach an agreement with the employee so that the parties are clear about the hours being worked.
What is the minimum furlough period?
Under the existing scheme an employee must be furloughed for a minimum period of 3 weeks for the employer to make a successful claim. From 1 July, this minimum period will cease to apply and agreed flexible furlough agreements can last any amount of time. Employees can also enter into a flexible furlough agreement more than once.
Although the flexible furlough agreement can last any amount of time, unless otherwise specified the employer must make a claim in respect of a minimum period of 7 calendar days.
What hours can the employee work?
For claim periods starting after 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 scheme the grant for the hours not worked. This means that an employer could agree for an employee to work half days for five days a week or work for one week and be furloughed for the following week.
How can an employer make a claim?
Under the scheme prior to 1 July, there was no maximum length for claim periods. However, 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, separate claims will need to be made to cover the period up to 30 June and the period commencing 1 July. The employer will have until 31 July to make a claim for the periods up until 30 June.
Although there is no minimum period of furlough, the minimum period claimed for must be 7 days after 1 July (although exceptions apply if the period is either the first or last day of the calendar month and a claim has already been made for the period ending immediately before it). From 1 July employers cannot make claims that cross calendar months, so the employer will need to make a separate claim for the period up to 30 June. The first time an employer will be able to make claims for days in July will be 1 July.
As before, an employer can only make one claim for any period. However there are also new provisions for what an employer should do if they have made a mistake with regard to the claim (see below).
Payments will be made 6 working days after the employer has made the claim and therefore this needs to be taken 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 normal 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 keep a record of the number of furloughed hours the employee has been furloughed in the claim period.
What records should the employer maintain?
The written agreement with the employee must be kept for a period of five years. However you should note that the guidance on keeping a record of how many hours the employee has worked and the number of hours on furlough (i.e. not working) states that such information should be retained for 6 years.
What about employees returning from statutory parental leave?
As mentioned above an employer can generally only furlough an employee who has previously been furloughed before 10 June. However, the point was made to HMRC that this discriminated against those who were on statutory family leave during this period. An exception has therefore been made for those employees and an employer can furlough an employee returning from statutory parental leave after 10 June even if they are being furloughed for the first time. However the following conditions apply:
- The employer must have previously submitted a claim for other employees in the organisation in relation to a furlough period of at least 3 consecutive weeks taking place any time between 1 March 2020 and 30 June
- The employee to be furloughed for the first time must have started maternity, shared parental, adoption, paternity and parental bereavement leave before 10 June and returned from that leave after 10 June
- The employee must have been on the PAYE payroll on or before 19 March 2020.
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. HMRC are allowing employers to tell them about an overclaimed amount as part of the next claim and the amount claimed in that period will be adjusted to take account of the previous error.
If the employer has made an error that has resulted in an underclaimed amount, then the employer should contact HMRC to amend the claim. HMRC will need to conduct additional checks as the employer is increasing the amount of the claim.
Where an employer is not making any further claims then HMRC are working on a process that allows the amounts to be paid back.
The amended guidance and the new guidance can be found on the Government website here