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  • Writer's pictureGreenline Accountants

COVID-19 Update - Flexible Furlough and The Job Retention Scheme

1st July marks the official start date of "Flexible Furloughing" under the Job Retention scheme, where changes in how the scheme operates come into effect to begin transitioning employees back into work.

In truth it makes the scheme a little more complicated than it was. Additionally the guidance regarding eligibility has changed slightly since originally announced.

First of all, all claims relating to the old version of the scheme (CJRS V1) which ended on 30 June 2020 need to be made 31 July 2020. If any clients haven't done so already and still have furlough claims to make pre 30th June, then they need to do so (or advise us) asap. Only those employers who made claims under the CJRS V1 will able to make claims under V2, and can only furlough those employees that were furloughed in V1.

Under the second phase of the Job Retention Scheme (CJRS V2) which effectively starts today, employers can now adopt "flexible furloughing", whereby employees can be brought back to work for part of the usual time they work, and furloughed for the remaining time.

We've detailed in previous updates what this means, but effectively the government will contribute towards any contracted hours NOT worked

by employees. The proportion of the governments contribution to these hours will decline over the months until the scheme closes entirely in October.

Previously, under CJRS V1, staff needed to be furloughed for at least three weeks to benefit from the scheme. However, flexible furlough agreements can last any amount of time although the period that employers claim for must be for a minimum period of seven calendar days. Employees can enter into a flexible furlough agreement more than once.

Note: Staff will need to agree on the arrangements of their part-time work.

This agreement should be confirmed in writing and a written record kept of it for five years. 

Furlough claims must contain details of usual hours and actual hours worked, with furloughed hours calculated as the difference between these. Again these need to be retained for five years.

Where the employee’s working hours are fixed, or their pay does not vary with the number of hours worked, the reference period for calculating their hours is the hours they were contracted for at the end of the last pay period ending on or before 19 March 2020.

Where an employee works variable hours, employers will use the higher of:

  • the average number of hours worked in the tax year 2019 to 2020; and

  • the corresponding calendar period in the tax year 2019 to 2020.

We're reprinting the timeline below of how the scheme will unwind from here.

Job Retention Scheme timeline

JULY - The government will pay 80% of wages up to the cap of £2,500 - as well as Employer National Insurance and pension contributions - for the hours the employee doesn’t work.

AUGUST - the government will continue to pay 80% of wages (subject to a cap as explained above), employers will have to pay Employer National Insurance and pension contributions. Many smaller employers have some or all of their employer NIC bills covered by the Employment Allowance so they may not see a significant change to their costs in August.

SEPTEMBER - As August but the government will pay 70% of wages not 80%, up to a similarly reduced cap of £2,187.50 (pro rata) for the hours the employee does not work. Employers will pay Employer National Insurance, pension contributions and 10% of wages to make up 80% total up to a cap of £2,500 (pro rata).

OCTOBER - As September but the government will pay 60% of wages up to a cap of £1,875 (pro rata) for the hours the employee does not work. Employers will pay Employer National Insurance, pension contributions and 20% of wages to make up 80% total up to a cap of £2,500 (pro rata). At the end of October the scheme will then come to an end.

Further guidance is offered here, or alternatively call our office to discuss with our payroll team should you require further clarification on the new rules.


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