The Coronavirus Job Retention Scheme will close on 31 October 2020.

From 1 July, employers can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim CJRS grant for the hours not worked.

From 1 August 2020, the level of grant will be reduced each month. To be eligible for the grant employers must pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed.

The timetable for changes to the scheme is set out below. Wage caps are proportional to the hours an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours:

• There are no changes to grant levels in June.
• For June and July, the government will pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee is on furlough. Employers will have to pay employees for the hours they work.
• For August, the government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay ER NICs and pension contributions for the hours the employee is on furlough.
• For September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
• For October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.

Employers will continue to able to choose to top up employee wages above the 80% total and £2,500 cap for the hours not worked at their own expense if they wish. Employers will have to pay their employees for the hours worked.

The table shows Government contribution, required employer contribution and amount employee receives where the employee is furloughed 100% of the time.

Wage caps are proportional to the hours not worked.

Claim periods

There is effectively a new CJRS in place for furlough periods from 1 July 2020. Furlough periods that straddle 1 July are treated as ending on 30 June 2020 and then restart under the new scheme on 1 July. Two separate claims will be needed for such straddling furloughs, with furlough days up to 30 June 2020 to be included in the June claim.

Claims under the existing CJRS scheme must be made by 31 July. Claims under the new CJRS cannot be made until 1 July.

If an employer wishes to claim for furlough periods in both June and July, they must make two separate claims for the June furlough and the July furlough. However, claims for furlough periods completed up to 30 June should be submitted before any claims made in respect of periods from 1 July 2020.

Under both the new and old CJRS, claims cannot be made more than 14 days before the end date of the claim, so claims with an end date of 31 July cannot be made until 18 July.

Only one claim per PAYE scheme is permitted, which must include all pay frequencies.

Claims must start and end within the same calendar month because the rules are changing from the beginning of each month. Also claim periods cannot be shorter than a week.

Who can claim from 1 July?

An employee can only be included in the claim from the 1 July if they had been furloughed for a minimum of 21 days at any point between 1 March 2020 to 30 June 2020; for example, an employee furloughed for three weeks in May, but who then returned to work can be included in a claim from 1  July.

Furlough periods

Any furlough periods up to 30 June must last at least 21 days, but those periods can be extended by any number of days. However, where an employee resumes work and then starts a new furlough period, that new furlough period must be at least 21 days.

To qualify for a claim for flexible furlough under the new CJRS, employees must have been furloughed for at least 21 days. If the employee begins a new furlough period after 10 June, they must complete a period of at least 21 days on furlough, before moving on to a flexible furlough arrangement. As stated above, any CJRS claim which straddles 30 June must be split into two to cover the June days and the July days in of the furlough period.

HMRC Validation

HMRC will validate the number of employees that can be claimed for. This must not exceed the highest number of employees that were in any claim up to and including 30 June 2020.

There are exceptions for:

• employees returning from parental leave who had not been included in a claim up to the 30 June.
• employees who have been moved to a new PAYE scheme as a result of a scheme reorganisation after 10 June, but had been in a claim under their previous PAYE scheme between 1 March 2020 and 30 June 2020
• employees transferred under the TUPE rules into a business due to a change of ownership or a compulsory liquidation after 10 June 2020, but who had been in a claim under their previous PAYE scheme between 1 March 2020 and 30 June 2020

There will be a facility to adjust the claim numbers to accommodate such employees.

Reporting the hours on the flexible furlough scheme

From 1 July 2020, employees can work and be furloughed in the same pay period, and even on the same day. If employers want to take advantage of this flexibility they will have to calculate all of the following for the employee:

• his or her ‘usual hours’
• actual hours worked
• furloughed hours worked

‘Usual hours’ are either:

• Contracted hours for salaried employees; or
• Specific formula for zero hours or variably paid employees

In all calculations always round up to the next whole number of hours.

Furloughed hours

To calculate an employee’s furloughed hours, deduct the actual hours worked from the usual hours. Employers will be expected to report the worked hours and the usual hours in the CJRS claims portal. Only where there are 100 or more employees in a claim can the details be submitted on a spreadsheet.

Since April 2019 employers in Great Britain have had to show the number of hours worked on payslips if pay varies based on hours worked. This requirement will apply to all employees who are flexibly furloughed from 1 July. Whilst the legislative requirement is to show the working hours as a total for the pay period, employers may choose to show furloughed hours as well for transparency.

The £2,500 wage cap continues to apply for July and August. This applies to each employment and is not aggregated, it is prorated to the hours in the pay period that the employee is furloughed, with this apportionment based on calendar days. The employer’s NIC threshold and pension threshold will also be apportioned.

National Minimum Wage

This will be an important consideration from 1 July for any employees who are working as well as being furloughed for part of the pay period. They must be paid national minimum wage (NMW) for each hour of work and training. Care must be taken for apprentices in particular.

Important to note

Be clear about what is required to be paid through the payroll, as per the employee’s terms and conditions for the hours worked, and the amount that can be claimed for under the CJRS for the number of furloughed hours. What an employer can claim under CJRS may be less than they had expected, and less than they are due to pay through the payroll.

Record keeping

As with any aspect of CJRS, the employer must keep a written agreement confirming the furlough arrangement. Records of these employee agreements must be kept for until 30 June 2025.