Owner Kate Upcraft Consultancy Ltd
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Coronavirus: Flexible furloughing framework

With a revamped Coronavirus Job Retention Scheme (CJRS) lined up for 1 July, Kate Upcraft analyses the technical detail for potential troublespots.

2nd Jun 2020
Owner Kate Upcraft Consultancy Ltd
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New quirks emerge for flexible coronavirus job scheme
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On Friday 29 May the Chancellor outlined a new flexible coronavirus job retention scheme (CJRS) to apply from 1 July, and tapered government support for employers from August onwards.

It was no surprise that financial support for employers will start to taper off, but it was a surprise that flexible furloughing will be introduced a month earlier than expected from 1 July.

Flexible furlough periods

This amounts to a new CJRS from 1 July, which requires no minimum furlough period. However, no new employees can be furloughed for the first time from July.

A furlough period for any employee who has not previously been furloughed will have to begin by 10 June in order for 21 days of furlough to be completed by the end of the old scheme on 30 June. It will not be acceptable for furlough to begin after that and extend into July to make a three-week furlough period, as the rules change on 1 July.

No minimum furlough

The financial support does not change for July, as the government continues to pay:

  • 80% wage support up to a £2,500 cap; plus
  • Employers’ NIC and 3% pension costs on furloughed hours.

Once the new rules are in place, employees can be furloughed for any length of time, even down to a few hours, and work the rest of the pay period, subject to the employer gaining their agreement in writing.

The challenge here is that the government is trying to develop rules and guidance that cover all types of contract. I predict problems in particular for workers on zero hours. How do you work out what the “normal hours” are for zero-hours workers?

Guidance under wraps

We won’t get the answers to such questions until 12 June, when the government promised to release more guidance. Presumably this delay is based on a concern that any guidance provided before 10 June might allow people to game the system. In my view, however, the vast majority of reputable businesses need that guidance now, not in a fortnight’s time.

We do know that the £2,500 cap will be pro-rated to the furloughed hours. For example, if the employee is working 40% of the month, the furlough cap is 60% of the monthly cap, so £1,500.

Claims deadline

Some employers have put off making any CJRS claims, particularly those with close to 100 employees on furlough. They may have done so in the hope that HMRC would allow spreadsheet uploads of employee details for smaller businesses, but there seems no prospect of that now.

Those reluctant employers need to make their CJRS claims now because no new employers (as well as employees) will be admitted to the new CJRS scheme from 1 July. The CJRS claim needs to be made in June and backdated to mid-March, given that was realistically the earliest furloughing date. An employer who has made already made a claim will be able to make their final claim for any period up to 30 June 2020 by 31 July, but it looks as if there would need to be two claims then, one for furlough periods up to 30 June and one for July.

It’s important to see 30 June as the end of the CJRS under the rules as provided for in the current legislation with a new scheme beginning from 1 July.

Numbers game

Under the “new” scheme from 1 July no CJRS claim can contain more employees than in any claim up to and including 30 June 2020.

This will be interesting given the outstanding technical problems payroll professionals are still having. Certain claims can’t be made without HMRC intervention because the validation to the February 2020 FPS doesn’t work where employees have been:

  • Transferred from another employer under TUPE into the PAYE scheme
  • Reinstated
  • Moved into the PAYE scheme after a restructure.

All of these situations are permissible, but the CJRS mechanism blocks the claim.

Hours and minimum wage

Another stumbling point in the new flexible CJRS is that any hours worked will need to be paid at or above the national minimum wage (NMW) rates, which increased by the highest ever amount from 1 April 2020. Given there have been lots of issues with employers misunderstanding the operation of salary sacrifice, and the fact that claims should have been based on post-sacrifice pay, it’s likely that salary sacrifice and the interaction with the NMW wage will cause trouble after 1 July.

It would be helpful if BEIS were to provide some FAQs on NMW and furloughing as soon as possible.

Reporting hours?

Under the new CJRS employers will need to report “hours worked” and “usual hours”. Is the choice of the word “report” crucial?  This implies that a report needs to be done through RTI as otherwise I would have expected the guidance to say “hours will need to be included in the claim details”.

Currently within the FPS field 54, “the number of normal hours worked” has four choices or “not applicable”, which provides data used to validate tax credit claims. Is this the field that is being referred to, or is there a more significant change to RTI that has to be implemented in less than four weeks?

Given there are no new claimants to tax credits now and Universal Credit has no hours’ dependency, is this reporting requirement just for statistical monitoring, or part of a compliance strategy?

Winding down

Financial support will change from 1 August as follows:

  • August – 80% wage support up to £2,500, but no employer NIC or pension costs covered
  • September – 70% wage support up to £2,187.50, but no employer NIC or pension costs covered
  • October – 60% wage support up to £1,875, but no employer NIC or pension costs covered

It is important to note that the reduction in wage support doesn’t allow employers to change the employees’ terms and conditions to reduce pay to these new levels. Employees must still receive 80% of normal pay, so the employer will have to make up the difference.

Guidance sources

So far the only guidance we have is a short fact sheet and a brief summary that has been added to the main CJRS guidance pages. We will have to wait until 12 June to find out more.

Replies (20)

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blue sheep
By NH
03rd Jun 2020 06:56

strange that employers were able to agree with employees to reduce pay to 80%, but that they cannot now agree to reduce to 70 and 60%

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Replying to NH:
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By neiltonks
03rd Jun 2020 08:27

The point is that the government wants employers to share the cost of furloughing. If the amount paid to employees could be reduced to match the government contribution, that objective wouldn't be achieved.

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By neiltonks
03rd Jun 2020 08:39

It will be interesting to see how the reporting of the hours is implemented. My guess (or maybe it's 'hope') is that it will be added to the information submitted with the claim.

If they change the FPS, but don't give details until Friday the 12th of June, they haven't much hope of payroll software support being in place in time given that first Friday of July is the 3rd, so the first July FPSs will be submitted around then.

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By ianvogan
03rd Jun 2020 10:28

It says that an employee cannot be furloughed for the first time after 1 July, but if an employee has been furloughed in May but brought back for six weeks can that employee be included in a furlough claim from 7 July?

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Replying to ianvogan:
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By Melanie O'Donnell
03rd Jun 2020 11:01

I have the exact same position, we have employees who have been on and off furlough according to our business needs and are currently working. Do we need to send everyone out on furlough on 10 June to be able to claim under the flexible scheme from 1st July - i.e. do they have to be on furlough for the three weeks IMMEDIATELY before 1st July to qualify? Or just been on furlough at any point since March?

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Replying to Melanie O'Donnell:
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By CatsandDogs
04th Jun 2020 09:03

I picked this up on Tuesday and managed to get a webchat with HMRC. I was advised that as long as an employee has been furloughed for 3 weeks between 1st March and 30th June, they can be brought back part time from 1st July. The employee does not need to be specifically furloughed between 10th and 30th June.
I have the transcript to prove it!

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Replying to CatsandDogs:
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By Melanie O'Donnell
04th Jun 2020 11:03

Thank you!

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By noggsy
03rd Jun 2020 10:50

If an employer (with staff currently furloughed) brings them off furlough prior to 10 June, does this prevent them from using the flexible furloughing come July 2020?
Thanks in advance!

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Replying to noggsy:
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By Constantly Confused
03rd Jun 2020 11:07

noggsy wrote:

If an employer (with staff currently furloughed) brings them off furlough prior to 10 June, does this prevent them from using the flexible furloughing come July 2020?
Thanks in advance!

My understanding is that so long as the employee has been furloughed for 3 weeks by the 30th of June, you are free to furlough them after the 30th.

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Replying to Constantly Confused:
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By Melanie O'Donnell
03rd Jun 2020 11:45

But do you mean ANY three weeks or the three weeks IMMEDIATELY prior to 1st July?

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Replying to Melanie O'Donnell:
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By Beancounter55
03rd Jun 2020 23:55

Any employee, who has been furloughed for at least a three week calendar period (21 days) prior to 1 July, can be furloughed in the months from July to October.

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By monksview
03rd Jun 2020 11:44

I have one furloughed employee who is still waiting for his NI number so no claim has been able to be made as yet. Bit unfair if the delays at the DWP causes him not to be able to have any funding if the deadline isn't met.

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Replying to monksview:
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By Robyn
03rd Jun 2020 13:27

By Monksview I spoke to HMRC yesterday as I am doing alot of claims for MArch to 30th June in middle of June to save time on claims and was worried about the 10th June comment. You will still be able to claim I was told and have a copy of the conversation saved. So no need to panic whenev er you get the NI number just make the claim then.

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Replying to monksview:
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By jules66
03rd Jun 2020 13:44

monksview wrote:

I have one furloughed employee who is still waiting for his NI number so no claim has been able to be made as yet. Bit unfair if the delays at the DWP causes him not to be able to have any funding if the deadline isn't met.


We have clients with missing NI numbers too. We have used NI number AB123456A and made sure that we have entered the payroll id for that employee. All claims have been paid so far.
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By johnfrancis
03rd Jun 2020 14:00

Great article - but is there any possibility of persuading AccountingWeb to STOP appending "get the details right" to a significant number of article links? It's getting a bit wearing.

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By johnfrancis
03rd Jun 2020 14:00

Great article - but is there any possibility of persuading AccountingWeb to STOP appending "get the details right" to a significant number of article links? It's getting a bit wearing.

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By North East Accountant
03rd Jun 2020 17:01

Looks like more nightmare months ahead.......

And next year we'll be dealing with all the compliance visits, employer errors, IR35 revisited and all the fallout from this pandemic.

And let's not forget October 2019 with the reverse charge for construction that will be a pain too.

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By chrisowen
03rd Jun 2020 17:20

Does anyone have the answer to this ?
I made a claim for the month of April, but entered the gross salary, instead of the 80% figure.
Of course, HMRC have refunded the gross figure, so we have been overpaid.
How to correct this ? The support line doesn't know. The obvious answer is to adjust the May claim downwards, but is it correct to do so?

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Replying to chrisowen:
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By CatsandDogs
04th Jun 2020 09:05

I have a call logged and HMRC will be calling me at some point to revise a couple of incorrect overpaid claims. On both occasions the client is no longer furloughing so I can't just adjust the next claim.

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By Hugo Fair
03rd Jun 2020 18:17

The concept of reporting “hours worked” and “usual hours” can IMHO only be intended to be achieved as additional data entered within the claim (whether the online form for smaller employers or an attached form).

HMRC has never created/published a specification change for RTI at the speed necessary from now to 12th June ... and software developers, as Neil Tonks has pointed out, aren't then going to deliver updated (and tested) software ready for use in less than 3 weeks.

Besides which, my understanding of why the new data items will be required is in order for the claim file to go through a new set of validations ... using the data to check the calculation of the amount claimed (and the pro-rating of cap applied where relevant) per part-furloughed worker.

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