On 29 May 2020, the Chancellor announced further changes to the furlough scheme with a number of key points that you should be aware of going forward.
The furlough scheme will be closed to new entrants from 30 June 2020. HMRC have clarified that this means to claim for an employee under the scheme from July, they must have completed three weeks’ furlough by 30 June 2020 so any employees that have not previously been furloughed for three consecutive weeks must have been furloughed by 10 June 2020 to be eligible for the scheme in July.
31 July 2020 is the deadline for making any claims in periods to 30 June 2020.
The Chancellor has announced that from 1 July the scheme will transition to allow employers to have the option of bringing back their employees on a flexible or part-time basis while still claiming for some of their wages from the government.
However, the number of employees an employer can claim for in any claim period from July 2020 cannot exceed the maximum number they have claimed for in any previous claim under the current CJRS.
In July, for the period that the employee is working, the employer will be responsible for paying them their normal wages and associated employer National Insurance Contributions and pension contributions. For the period that they are not working, the government will continue to fund 80% of the wages (capped at £2,500 per month) and the associated employer National Insurance Contributions (NICs) and minimum employer pension contributions.
From 1 August 2020, employers will continue to be able to bring furloughed employees back to work, but the funding from the government will reduce.
The scheme will end on 31 October 2020.
From July to August, employers taking advantage of the flexible furlough option will need to work out employees’ usual hours and record the actual hours they work to calculate the furloughed hours for the claim period.
For those employees who work fixed hours, the usual working hours will be the number of contracted hours in the pay period on or before 19 March 2020.
For those employees who work variable hours, the ‘usual hours’ in this case will be calculated based on the higher of either:
This calculation can include overtime hours, as long as the overtime pay was non-discretionary.
To calculate the hours that employee is not working, employers should subtract the hours actually worked from the usual working hours. The percentage that the government will fund through the scheme will apply to this amount under the flexible scheme.
As a result of the transition, there are two important deadlines to be aware of.
HMRC has promised that claims already submitted will be able to be amended in due course. If you have made errors in previous claims resulting in an over-payment of a grant, you can now adjust for this in your next claim. However, there is still no online facility to adjust for errors in previous claims that have led to an underpayment of a grant.
Amounts that can be claimed through the scheme while the employee is not working:
Option to start phasing employees back to work. Claims will be more complex going forward - ensure you can record time worked and time not worked in order to make a claim.
To discuss any aspect of your claims process please get in touch with your Crowe contact.
* employer to fund the rest.
For more information on what you need to action and by when of, contact Caroline Harwood or your usual Crowe contact. Read more on the furlough scheme on the following web page: Support for employers during the COVID-19 pandemic.
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