QUESTION: My business has been severely affected by Covid 19 and I have availed of the job retention scheme for a large number of my employees. I'm now starting to see a pick in orders and I would like to take some of my staff back to work. I have read about increased flexibility in the furlough scheme. Can you explain what these changes are?
ANSWER: In early June, the government released a raft of further guidance concerning the coronavirus job retention scheme and changes which will be implemented from July 1. The new and updated guidance sets out who will be eligible from Wednesday and explains how “flexible furlough” will operate.
From Wednesday, employers will only be able to claim a grant for employees that have already been furloughed for three consecutive weeks between March 1 and June 30. Therefore, the last date an employee could have started furlough for the first time was June 10.
From Wednesday, the number of employees that employers can claim for in any single claim period cannot exceed the maximum number of employees that the employer claimed for under any claims ending by June 30. For example, if an employer previously submitted three claims between March 1 and June 30, in which the total number of employees furloughed was 20, 30 and 50 employees respectively, the maximum number of employees that the employer can furlough in any single claim from Wednesday will be 50.
Employers will be able to “flexibly furlough” their employees from Wednesday. This means employers can bring people back to work for any amount of time and on any work pattern. Employers will be able to claim a grant for the hours which flexibly furloughed employees do not work, compared to the hours they would normally have worked in that period.
If an employer wishes to flexibly furlough staff, they will need to obtain their employees’ agreement and keep a written agreement that confirms the new furlough arrangement. This agreement must be kept for five years. Employers must also keep records of how many hours their employees work and the numbers of furloughed hours for six years.
There is new guidance for employers on how to decide the length of the claim period. Some of the key points are:
• Claims for any periods starting before July 1 must end on or before June 30, even where an employee is furloughed continuously. Separate claims will need to be submitted to cover the days in June and the days in July.
• The latest that employers can submit claims for furlough periods ending on or before June 30 is July 31.
• The earliest that employers will be able to submit claims for furlough periods commencing in July will be July 1.
• Claim periods starting on or after July 1 must start and end within the same calendar month and must last at least seven days unless an employer is claiming for the first few days or the last few days in a month.
• Employers can only make one claim for any period, so they must include all furloughed or flexibly furloughed employees in one claim.
• When claiming for flexibly furloughed employees, employers should not claim until they are sure of the exact number of hours they will have worked during the claim period. If employers claim in advance and the employee works more hours, then the employer will have to pay back some of the grant to HMRC.
Whilst the new flexible furlough is a welcome boost for businesses, it is going to bring added complexity in calculating claim periods, entitlement and grant support under CJRS. Employers should provide their payroll team with this information as early as possible in the weekly/monthly payroll process.
Feargal McCormack (f.mccormack@pkffpm.com) is managing director of PKF-FPM Accountants (www.pkffpm.com). The advice in this column is specific to the facts surrounding the question posed. Neither the Irish News nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.
