COVID-19: UK Gov Flexible Furlough Scheme – 1 July 2020 Update

By Nic Hart &  Liam Hutton

Nic Hart

01.07.2020

The Flexible Furlough Scheme (FFS) commenced today July 1st 2020 and you can now submit claims for periods starting on or after 1 July.

GOV.UK published a news story this afternoon announcing this commencement.

As discussed in earlier mail outs the main premise of the FFS is to allow;

“businesses to bring furloughed employees back to work on a part time basis and will be given the flexibility to decide the hours and shift patterns of their employees – with the government continuing to pay 80% of salaries for the hours they do not work.”

The FFS will remain open until the end of October 2020.

In addition to the general news story announcing the commencement of the scheme there have also been further updates to the Government Guidance-published July 1st 2020- as follows;

  1. If your employee was paid a statutory payment in the claim period, you must subtract the amount which is paid to the employee for the claim period from the amount you claim under the scheme, if your employee is paid:
  • Statutory Maternity Pay
  • Statutory Adoption Pay
  • Statutory Paternity Pay
  • Statutory Shared Parental Pay
  • Statutory Parental Bereavement Pay

Your employee cannot be furloughed while they receive statutory sick pay and your employee cannot receive statutory sick pay while they are furloughed.

Under the ‘Check if you can claim for your employees’ wages through the Coronavirus Job Retention Scheme’ there is further information that employee taxes and pension contribution payments must be paid directly to HMRC.

Your employees will still pay the taxes they normally pay out of their wages. You must deduct income tax and National Insurance contributions on the full amount, including any scheme grant, that you pay the employee. You must pay the income tax and National Insurance contributions to HMRC and report the payments via a Full Payment Submission to HMRC on or before the pay date.

This includes pension contributions (both employer and automatic contributions from the employee), unless the employee has opted out or stopped saving into their pension. Until 31 July, you can continue to claim for these costs for the hours the employee is on furlough. From 1 August, employers will not be able to claim for employer NICs and pension contributions.

Additionally, there is new guidance regarding holidays under the FFS. It remains the case that furloughed employees continue to accrue leave as per their employment contract and that employees can take holiday whilst on furlough however;

“If an employee is flexibly furloughed then any hours taken as holiday during the claim period should be counted, as furloughed hours rather than working hours, and employees should not be placed on furlough for a period simply because they are on holiday for that period.

Employers will be obliged to pay employees who are on holiday additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need and the correct notice is given. This applies for both the furlough period and the recovery period.”

As we have stated the examples of calculations are key and there is a new example of calculating an employee’s average hours for a variable hours employee who takes statutory adoption leave in 2019/20 and additional information on how to calculate furloughed hours for different sets of circumstances.

Finally if you have made an error in a claim and do not plan to submit further claims, you should contact HMRC who will advise how to pay back any overclaimed amounts. They will provide a payment reference number and directions to make a payment.

We will continue to keep you updated on any developments to the guidance.

To close, a quick reminder that employers can continue to fully furlough employees if they wish, but if they do use the FFS they must ensure that their employees do not undertake any work during any time that is recorded as furlough leave.

For More Information

Please do get in touch if you have any queries.