Late last night (at 9.30 p.m.) the Government updated its guidance on how to claim for wages under the Coronavirus Job Retention Scheme from 1st July.
As we are still in June I am first going to remind you of the actions you need to be aware of before we get to 1st July.
- Anyone who is to be furloughed after 1st July must have been claimed for between 1st March and 30th June. They must have done a minimum of a 3 week furlough period.
- You can’t claim for July before 1st July.
- The last date you will be able to claim for periods before 30th June is the 31st July.
- Where a previously furloughed employee starts a new furlough period before 1 July this furlough period must be for a minimum of 3 consecutive weeks. This is the case regardless of whether the 3 consecutive week minimum period ends before or after 1 July.
The number of employees you can claim for in any claim period starting from 1 July 2020 cannot exceed the maximum number of employees you claimed for under any claim ending by 30 June 2020. This may differ where you have an employee returning from statutory parental leave.
So what will you be able to do from 1st July?
From 1st July, employers can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim Coronavirus Job Retention Scheme grant for the hours not worked. This is now known as Flexible Furlough. This is going to be very useful for employers who are now able to reopen and trying to trade again.
What if someone can only work mornings due to childcare?
That means you will be able to pay them 100% to work they can do for you in the claim period, and pay them furlough for the hours they can’t. You will be able to claim for the difference, (subject to the restrictions placed on childcare employers).
What if you have someone working part weeks?
The same applies, you will be able to pay them 100% to work they can do for you in the claim period, and pay them furlough for the hours they can’t.
What form of evidence will we need to provide?
If you flexibly furlough employees, you’ll 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. This may change and therefore new agreements will be needed for each employee whenever a change occurs. You will need to keep evidence of the written agreement for 5 years.
What other records will I need?
Whilst there’s no doubt flexible furlough is going to be useful. It is also going to be an administration nightmare to get right. You will need to keep meticulous records as the likelihood of the HMRC auditing CJRS claim increases in our mind with every generous move the Chancellor makes. You will need to keep records of how many hours your employees work and the number of hours they are furloughed (i.e. not working).
What if I have employees I want to leave on Furlough and not ask to work flexibly?
Then these will not need a new agreement they can remain furloughed under the existing agreement. Employees cannot undertake any work for you during time that you record as them being on furlough. They can undertake training subject to the previous rules on ensuring that training time is not so much as to lead to a breach of the minimum wage regulations. We can’t stress enough the importance of not asking people to come to work to help you get ready for re-opening whilst they are furloughed. Only one persons partner needs to complain to the HMRC and you risk the entire claims you have made under the CJRS. Please don’t do it.
How does long does a new flexible furlough agreeement last?
From 1 July, agreed flexible furlough agreements can last any amount of time. Employees can enter into a flexible furlough agreement more than once.
Whats the minimum period I can claim for?
Although flexible furlough agreements can last any amount of time, unless otherwise specified the period that you claim for must be for a minimum claim period of 7 calendar days. You can only make one claim for any period so you must include all your furloughed or flexibly furloughed employees in one claim even if you pay them at different times. If you make more than one claim, your subsequent claim cannot overlap with any other claim that you make. Where employees have been furloughed or flexibly furloughed continuously (or both), the claim periods must follow on from each other with no gaps in between the dates.
Can I claim in advance of my payroll?
You can claim before, during or after you process your payroll; you can usually make your claim up to 14 days before your claim period end date and do not have to wait until the end of a claim period to make your next claim. Claims for periods after 30 June can be made from 1 July.
You do need to be careful though. What if you did your claim and the employee wasnt available for the work?
When claiming for employees who are flexibly furloughed you should not claim until you are sure of the exact number of hours they will have worked during the claim period. This means that you should claim when you have certainty about the number of hours your employees are working during the claim period.
Our advice is that If they work less, you should treat their absence as you would any absence and not claim for it as furlough. If you permit someone to agree to work flexibly and them if they dont you reward them with furlough pay, our belief is that you will see further disruption to your business when the scheme has been designed to help you get back on your feet.
What if I have to ask someone who I was going to furlough some of the week to work extra for me, perhaps at short notice?
Be reasonable with your staff, whilst on furlough they should be available for work, but they may have good reasons why they cannot react at short notice. Don’t forget, if you claim in advance and your employee works for more hours than you have told us about, then you will have to pay some of the grant back to HMRC.
How do I work out what would be the employee’s normal hours in the claim period?
This is where is gets really messy, really quickly. The HMRC has provided different equations to work out different variables.
Now I am no fan of maths, (GCSE Grade C here, but this is horrible).
- Broadly, from 1 July, you will claim a pro rata’d amount of 80% of salary, based on the proportion of hours not worked out of normal working hours.
- To calculate the normal working hours for those with fixed hours/pay, you simply take the number of hours worked in the same pay period before 19 March 2020.
- To calculate the normal working hours for those with variable pay, you take the higher of (a) the average number of hours worked in the tax year 2019 to 2020 or (b) the corresponding calendar period in the tax year 2019 to 2020. Like we did for the initial furlough claims.
Here at Redwing we will work out whether it is something an excel spreadsheet can help with. You know my boys love a spreadsheet.
We feel it will be messy in childcare because you don’t just have salaried staff.
- You will have variable paid workers – these are ones who work the hours you give them, their hours may change each month. They will need one time of calculation.
- You may have salaried employees, who are paid for the same about of hours each pay period.
- You will have contracted employees who are guaranteed the same hours each pay period by evidence in your contract of employment.
We will cover more on this in furture blogs but we do know that you will need the pay records for 1st April 2019 to 31st March 2020 to help you work out your claim. Make sure you have this information to hand in a means you can manipulate it.
Don’t forget the minimum wage?
Your staff may not have done any work for you since the rates changed on 1st April. Please make sure you are paying the correct amounts for any work done. You do not want to be on the wrong end of an unlawful deduction from wages claim.
If we can be of any assistance with any aspect of HR or Furlough, please do not hesitate to call us on 01527 909436.