CJRS and flexible furlough
HM Treasury has issued a further Treasury Direction, outlining the second phase of the Coronavirus Job Retention Scheme (CJRS), in essence modifying the effect of the previous Directions made on 15 April 2020 and 20 May 2020. The new Direction sets out the rules that will apply under the amended CJRS from 1 July 2020, which allows for 'flexible furlough' arrangements, until 31 October 2020, when the scheme comes to and end. The modified scheme confirms that the final date for making claims under the original CJRS is 31 July 2020, as it was set out in the previous Directions and remains in force until 30 June 2020.
It is important to note that according to the modified version of the CJRS, employers will only be able to participate in the second phase of CJRS from 1 July 2020 if they have made a claim under the original scheme by 31 July 2020 in respect of an employee who has been furloughed for a minimum of three weeks beginning on or before 10 June 2020.
From 1 July 2020 the CJRS allows complete flexibility for employees and employers to adopt a suitable working/non-working arrangement which is agreed between them. This means the furlough leave period can vary significantly, from day to day or week to week. Employers need to ensure accurate records of hours worked are maintained.
Although the flexible furlough agreements between employers and employees can last any amount of time (and employees can enter into a flexible furlough agreement more than once), employers need to note that where an employee's furlough period starts before 1 July 2020, this must be for a minimum period of 3 weeks. This is even if this period takes the employee past 1 July 2020. This highlights the slightly more complex system where there needs to be two claims for any overlapping claim of 21 days from 10 June 2020 onwards as from 1 July 2020 the employers need to claim on a monthly basis. Despite the flexibility over the length of the furlough agreement, the minimum period that employers claim for must be for a minimum of seven calendar days.
During July 2020, the grant available via the scheme will remain unchanged (the lesser of 80% of pay and £2,500). The intention is that with the workforce slowly returning to work, the government will in turn reduce its contribution over the coming months (1 August to 31 October 2020) with a gradual increase in the employer contribution up to paying 20% of their employees' wages in October with the CJRS contributing 60% of wages.
It is anticipated that this new flexibility will accommodate flexible shift patterns, and employees to return to work on a part-time basis initially, if the demand in their work is reduced. Although it is also noted that calculating claims for the purposes of CJRS for varying working periods will be more complicated.
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This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.