Continuing Furlough – The Options

• Currently the CJRS is set to be wound up on 31 October 2020, and since 10 June has been closed to new entrants with the exception of those returning from family leave. Employees returning from maternity, adoption, paternity, shared parental or parental bereavement leave can still be furloughed under the CJRS provided that the employer has used the scheme for other eligible employees by that date.
• If you have employees currently on furlough, they can continue to remain so until 31 October. If your furlough agreements cover a shorter period, you will need to agree with the employee to extend. You will also need to revise existing furlough agreements if you intend to implement part-time working or reduce any top up you currently make to the employee’s wages over and above the CJRS grant. For audit purposes you will need to keep copies of all furlough agreements for five years.
• Employers who wish to bring furloughed employees back part-time will be permitted under the CJRS after 1 July to implement ‘flexible furlough’. The guidance leaves it to the employer and employee to determine the working hours and pattern of work. There are no maximum working hours, however employees will be entitled to be paid their full pay for the hours worked.

However, any employee furloughed before 1 July must still complete a three week minimum furlough period before rotation or any flexible arrangements start in order to be eligible for funding under the scheme for the period prior to 1 July.

Employers will only be able to claim under the CJRS for the non-worked hours in the claim period based on the employee’s normal working hours (employee normal working hours in the claim period LESS hours the employee actually works in the claim period – not just what hours have been agreed). The monthly wage cap (currently £2,500) will be proportional to the non-worked hours. For both claim and audit purposes employers should be recording actual hours and furloughed hours for each claim.

For employees whose pay does not vary according to their working hours, normal working hours will be their contractual hours in the pay period prior to 19 March 2020.

For employees whose hours/pay varies, normal working hours are calculated based on the higher of:

• average number of hours worked in tax year 2019-2020; and
• the number of working hours in the corresponding calendar period in tax year 2019-2020 (i.e. the corresponding week for weekly paid staff or the corresponding month for monthly paid staff). These should include any hours of leave for which the employee received their full contracted rate and any overtime that was not discretionary.

The government guidance provides example flexible furlough calculations to assist employers which are, to say the least, complicated (https://www.gov.uk/guidance/steps-to-take-before-calculating-your-claim-using-the-coronavirus-job-retention-scheme#usual-hours), so it would be worth reading through these before deciding what flexible working arrangements you will put in place.

• Employers can still furlough employees on a full time basis; there is no obligation to require an employee work part-time to remain eligible under the CJRS, but note the CJRS grant changes, as set out below.
• Employers have the option to re-furlough employees who have already been brought back to work provided that the employee was previously furloughed for at least the minimum three consecutive week period at any time between 1 March – 30 June. However, from 1 July employers will not be able to claim via the CJRS for more furloughed employees in a claim period than they have claimed for under a single previous claim before 30 June (with the exception of employees returning from family related leave).
• Rotation of employees on furlough still also remains an option. From 1 July there is technically no minimum furlough period, so employees could rotate on a shorter basis than every three weeks. Nevertheless, under the CJRS claim periods must be for at least 7 days; employers can only claim for a period of fewer than 7 days if the period claimed for includes the first or last day of the calendar month and the employer has already claimed for the period ending immediately before it.  From 1 July claim periods must start and finish in the same month.

Changes to CJRS Government Contributions

From 1 August employers will be required to contribute towards the cost of furloughed employee wages:

• From 1 August, employers will be required to fund employer national insurance and pension contributions.
• The government contribution under CJRS will be reduced:
  • From 1 September to 70% of pay (capped at £2,187.50); and
  • From 1 October to 60% of pay (capped at £1,875).

Monthly caps will be proportional to non-worked hours in the case of employees on flexible furlough.

Employers will need to top up furlough pay so that it is no less than 80% of pay (capped at £2,500). If, however, an employer is unable or unwilling to make up the shortfall it will not be able to benefit from the scheme. It is still at the employer’s discretion whether to top up an employee’s furlough pay to more than the cap, but if it does not do so it will need the employee’s consent.

The grant for non-worked hours under the CJRS is based on pre-furlough pay. Employees will be entitled to their full pay for the hours they work on any flexible furlough/rotation arrangement. Employers do not appear to be prevented currently from agreeing, with employee consent, pay reductions.

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