With 1st July upon us, and the implementation of Flexible Furlough, many employers are left uncertain as to what they can and can’t do and how the claims process will now work.
New guidance on the scheme was published on 12th June 20, adding a raft of new requirements and additional steps to an already complicated process. So, where does this now leave employers? We cover the new processes and the most commonly queried areas below.
Main Points of the New Scheme
The main points of flexible furlough are:
- Employers can bring their staff back to work from 1st July, for as many, or as few hours as needed.
- Employers do not have to bring back all staff. Full furlough can still be used if needed with no minimum periods, up until the end of October 20
- Employers will be responsible for meeting 100% of normal pay for any time employees spend working
- Furlough pay at 80% will continue to be claimed from the government, with further changes due from from August 20
The New Claims Process
Flexible furlough means a change to the claims process which could cause complications for those whose pay periods extend across two months.
- The new claims process is based on weekly claim periods and claim allowances will be based on usual hours of work
- Claim periods cannot cross two months, separate claims have to be made for the weeks or days wholly within July, August, September and October
- Claims for a whole months can however be submitted e.g. from 1st – 31st July
- Claims can be made up to 2 weeks in advance of the employees pay date
- If an incorrect furlough claim is made, such as an employee worked more normal hours than reported, this could lead to an overclaim. An adjustment is required in the following claim
- Any claims relating to June 2020, must be submitted to HMRC before 31st July 2020
Employee has a 4 week pay period running from 20th July – 16th August 20.
The employer would have to make 2 claims as follows:
Claim 1: 20th – 31st July
Claim 2: 1st August – 16th August
The New Average Hours Element
With the new claims process switching to weekly periods, this means furlough claims have to be calculated a little differently.
- Employees with Fixed Hours Contracts
Where employees work a fixed or contractual number of hours per week, such as 37 hours over 5 days, and did so as at 19th or the later date of 22nd March, the calculation will be:
37 hours / 7 days = 5.29 hours per day
5.29 hours will be multiplied by 5 days = 27 hours (rounding to the nearest whole number)
- Employees with Variable or Zero Hours Contracts
Employers can use the higher of:
the total number of hours worked between 6th April 2019 and 22nd March 2020 or the corresponding calendar month in the prior tax year e.g. July 2020
Hours worked during tax year
Employee worked 1850 hours in the tax year
Divide 1850 by 352, (no of calendar days employee was employed during tax year) = 52.57
Multiply 52.57 by pay period e.g. 7 days = 37 hours (rounded to nearest whole number)
Hours in corresponding period last tax year
Employee is paid in July 2020 .
The employer would need to look back at the prior years pay period to determine the number of hours worked by the employee. If this is higher than the calculated average no of hours for the prior tax year, this higher figure should be used for the average hours calculation.
Eg. Employee worked 184 hours in July 2019 and 164 hours in July 2020.
- The Employer uses the higher figure of 184 hours as the average number of hours for the employee.
The 80% Element
Employers will continue to use 80% of:
- Monthly Salary Figure
- Normal Hourly Rate
- Average Day/Month Rate
Employers will calculate 80% of an employees usual wage and multiplying this figure by the number of furloughed hours.