From 1 July 2020, the Coronavirus Job Retention Scheme (CJRS) changes to enable employers to bring furloughed employees back to work for any amount of time or shift pattern, while still being able to claim CJRS grant for the hours not worked.
The government have stated that this means there is a new second phase CJRS in place for furlough periods from 1 July 2020. The first CJRS closes on 30 June 2020.
The government has now published updated guidance for employers that want to use the new flexi furlough scheme from 1 July onwards, including details on how to determine furloughed employees’ pay and calculating a claim.
- Claims under the existing CJRS, which closes on 30 June, must be made by 31 July;
- Claims under the new CJRS cannot be made until 1 July;
- If a furlough period overlaps the deadline of the existing scheme and commencement of the new scheme, it should now be treated as ending on 30 June and then restarting under the new scheme on 1 July;
- Two separate claims will be required for overlapping furlough periods, with furlough dates up to 30 June to be included in the June claim;
- Claim periods starting on or after 1 July must start and end within the same calendar month and must last at least 7 days unless you are claiming for the first few days or the last few days in a month; and
- You can only claim for a period of fewer than 7 days if the period you are claiming for includes either the first or last day of the calendar month, and you have already claimed for the period ending immediately before it.
Calculating usual and furloughed hours
From 1 July, employees can work and be furloughed in the same pay period. Employers will need to agree with an employee their working hours using the flexi furlough scheme and this needs to be done in writing.
To take advantage of this flexibility employers will be required to calculate and report to HMRC in the furlough claim:
- ‘Usual Hours’; and
- Actual hours worked.
The unworked hours will be furloughed hours and eligible for a CJRS claim.
‘Usual Hours’ are:
- Contracted hours for salaried employees; or
- Specific formula for zero hours or variably paid employees
Furloughed hours are:
- An employee’s usual hours minus the actual hours worked.
Using the Job Retention Scheme Calculator
The Job Retention Scheme Calculator can be used to work out:
- What employers can claim for in a claim ending on or before 30 June;
- What employers will be able to claim for claim periods starting on or after 1 July and ending on or before 31 July; and
- For employees that are flexibly furloughed, employers will need to work out their usual hours before using the calculator.
Calculating 80% of an employee’s usual wage
Employers will need to calculate 80% of an employee’s usual wage to determine:
- How much to pay them for the time they are furloughed; and
- What employers can claim.
An employer will need to identify:
- The number of furlough days in the period;
- This means every calendar day within a period when;
- An employee was fully furloughed; or
- Under a flexible furlough agreement.
The Job Retention Scheme Calculator can be used to assist in the calculation of how much an employer can claim, however there will be some scenarios when this may not be suitable.
Employers should choose the calculation that best fits the way an employee is paid, for example if an employee has a regular fixed salary then they should use the calculation for fixed pay amount.
What is the maximum claim amount?
- The maximum wage amount is £2,500 a month, or £576.92 a week;
- From 1 July this is not necessarily the amount claimed, however;
- Employers will still need to work out the maximum wage amount to enable the calculation of employee pay and the amount of CJRS grant that can be claimed; and
- Employers will also be required to calculate 80% of an employee’s usual wage, as detailed above.
Calculating how much can be claimed for an employee’s furlough pay
For periods ending on or before 31 August you can claim a grant for the full amount of the minimum furlough pay;
For periods starting on or after 1 September you will need to calculate the grant amount as follows.
1. Start with the amount of minimum furlough pay;
2. Divide by 80;
3. Multiply by 70 for September; OR
4. Multiply by 60 for October.
Further guidance on the Coronavirus Job Retention Scheme, including information on calculating claims for employer pension contributions and National Insurance contributions, can be found by downloading our Factsheet below.