On 25 June, the Government published the Treasury Direction to flexible furlough (and of course it was issued on a Friday afternoon!). There is no disputing that flexible furlough whilst simple in principle is rather complex to administer and will require employers to take preparatory steps and plan before implementation.
- The new Direction covers claims for the Coronavirus Job Retention Scheme (CJRS) from 1 July 2020 to 31 October 2020.
- The Direction makes it clear that no new entrant can join the CJRS scheme now; staff must have been furloughed by 10 June (employees returning from family leave are exempt from this deadline).
- It is important to have a written agreement recording the flexible furlough arrangements with employees.
- Any furlough agreement from 1 July is a flexi-furlough agreement which involves complex calculations.
- Whilst it sounds simple in principle to calculate the employee’s total usual hours and actual working hours, unfortunately it’s not as straight-forward as it appears (a view shared by ICAEW Tax Faculty, see link below). As such it’s important to start preparing and assessing this in good time before making a claim.
- The only way to avoid the flexi-furlough calculations is for an employee to be on furlough for the whole claim period (i.e. the whole month) which in turn removes any flexibility.
- 31 July, is the last day that you can submit claims for periods ending on or before 30 June.
- If you have claim periods straddling June and July, it will be necessary to submit two separate claims, with June claim covering the period up to 30 June. As claims cannot be made more than 14 days in advance, claims up to 31 July cannot be made before 18 July.
- It is also important that claim periods must start and end within the same calendar months, and must be for a minimum period of 7 days (they don’t have to be 7 consecutive days save for the start and end of the month). For payrolls which operate every four weeks, these will need to be split into more than one claim in order to satisfy the need to align with the calendar month end.
- It is also interesting to note that the Government has also launched a process to enable employers to correct over claims of the grant. When making the next claim employers will be asked whether they need to reduce the amount to take account of a previous over claim. The process does not apply if you have under claimed, if you have any such concerns you should contact HMRC by telephone 0800 024 1222).
If you require assistance drafting flexible furlough agreements or assistance with implementation please contact the Employment Team.
Treasury Direction: https://assets.publishing.service.gov.uk/
Steps to take before calculating your claim: https://www.gov.uk/guidance/steps-to-take-before-calculating-your-claim-using-the-coronavirus-job-retention-scheme
Calculate how much you can claim: https://www.gov.uk/guidance/calculate-how-much-you-can-claim-using-the-coronavirus-job-retention-scheme