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Changes to the Furlough Scheme - New Deadlines & Increased Employer Contributions

The highly anticipated changes to the Furlough Scheme were finally confirmed on Friday 29 May 2020 and clarified the increased employer contributions required. In an announcement that showed his continued support for businesses and in a bid to kick-start the UK economy, the Chancellor unveiled plans to launch a new Flexible Furlough Scheme. This will give employers the flexibility to bring staff back on a part-time basis whilst still receiving that crucial support from the government. An overview of these changes and key dates have been provided below.


Flexible Furlough Scheme Changes

So what is the Flexible Furlough Scheme?

This is still the same Furlough Scheme that has been in operation since March 2020, but the main difference it that from 1 July 2020, it is now known as the Flexible Furlough Scheme. This is because it now allows employers more flexible working arrangements so they can bring staff back for as long or as short a period as they need. This can be on a part-time basis for instance, and then if necessary re-furlough staff again for as long as they need, to meet the demands of their business at that time. 

How does it differ from the Old Furlough Scheme? 

Under the old furlough scheme, employers were required to furlough employees for a minimum claim period of 3 weeks. Now under the Flexible Furlough Scheme arrangements, a minimum claim period is set at 7 days, so employers can bring staff back on a part-time basis and vary their hours on a week-by-week basis, with the wage costs for hours usually worked supported by the scheme until it finally closes on 31 October 2020. In summary, employers will pay staff in full for the hours they work and for the usual hours they have not worked, they will be furloughed and their wage costs claimed through the furlough scheme.

Furlough Periods & Claim Periods

Old Furlough Scheme 1 March - 30 June 2020

  • The minimum period an employee could be furloughed for was 3 consecutive weeks. This applies to all furlough periods that started in June, even if they end after 1 July.
  • Any claims for the period ending on or prior to 30 June 2020 must be made by 31 July 2020.

New Flexible Furlough Scheme 1 July - 31 October 2020

  • From 1 July there is no minimum furlough period, furlough periods can last any amount of time.
  • Claim periods starting on or after 1 July must start and end within the same calendar month.
  • You can only claim for a period of fewer than 7 days if the period you are claiming for includes either the first or last day of the calendar month, and you have already claimed for the period ending immediately before it. See claim instructions below.
  • Separate claims will need to be submitted to cover the days in June and the days in July that you want to claim for, even if employees are furloughed continuously. This may mean that your claim periods will differ from the pay periods you use.
  • You can make more than 1 claim in a month but you cannot claim for the same period twice.
  • You can only make 1 claim for any period and you must include within that 1 claim all your furloughed or flexibly furloughed employees.
  • If you make more than 1 claim per month, your subsequent claim cannot overlap with any other claim that you make during that month.
  • The claim periods must follow on from each other with no gaps in between dates.
  • You can claim up to 14 days before your claim period end date e.g. claims for periods after 30 June can be made from 1 July 2020.

The HMRC have advised employers to only claim when they are certain of the hours actually worked to avoid having to pay back claims. This is particularly important for flexible furlough where hours worked can vary. For full details please visit GOV.UK

 

Who is eligible for the Flexible Furlough Scheme?

Only those employees who have been previously furloughed for a minimum 3 week period prior to 30 June 2020. Exceptions to this ruling were made for employees on maternity and paternity leave as long as their employer had previously furloughed employees by 10 June 2020 for a minimum 3 week period prior to 30 June 2020.

As a reminder, we advise all employers to ensure that they have furlough agreements with employees and that there are records kept of all usual hours worked and hours claimed. To meet HMRC auditing requirements, these records are to be kept for a minium of 5 years.

 

Increased Employer Contributions


Until 31 July 2020, the Furlough Scheme will meet 80% of wage costs, but from 1 August 2020 the government contributions will decrease each month and employer contributions will be increased to meet the 80% wage costs, before the Scheme finally closes on 31 October 2020.

Employers must continue to pay 80% of furloughed wage costs and can choose whether to top up wages to 100%, but they must also continue to pay employees for any hours worked.
 

July 2020 – 80% Furlough Funding

  • From 1 – 31 July the Scheme pays 80% of staff wage costs
  • Potential furlough grant amount = £2,500 per month.
  • This is the final month that employers can claim NI and pension contributions.

 

August 2020 – 80% Furlough Funding

  • From 1 – 31 August 2020 the Scheme pays 80% of staff wage costs.
  • Employers need to pay NI and pension contributions. These are not claimable.
  • Potential furlough grant amount = £2,500.

 

September 2020 – 70% Furlough Funding

  • From 1 – 30 September the Scheme pays 70% of staff wage costs.
  • Employers need to pay 10% of wage costs. These are not claimable.
  • Employers need to pay NI and pension contributions.
  • Potential furlough grant amount = £2,187.
     

October 2020 – 60% Funding

  • From 1 – 31 October 2020 the Scheme pays 60% of staff wage costs.
  • Employers need to pay 20% of wage costs. These are not claimable.
  • Employers need to pay NI and pension contributions.
  • Potential furlough grant amount £1,875.
     

Important Information & Key Dates

  • The current Furlough Scheme closed to all new entrants from 30 June 2020 with the exception of those on parental leave.
  • Employers who want to furlough new entrants to the Furlough Scheme needed to do so by 10 June 2020.
  • All new entrants were required to meet the eligibility criteria for the Furlough Scheme.
  • Any claims for the period ending on or prior to 30 June 2020 must be made by 31 July 2020.
  • Employers can still choose to top up an employee’s salary to 100%, but do not have to.
  • The number of employees claimed for in any claim period cannot exceed the maximum number for which they have already claimed under the current Furlough Scheme.
  • The Furlough Scheme will end on 31 October 2020.


New Flexible Furlough Scheme


Open from July 2020, the Flexible Furlough Scheme gives employers greater flexibility to bring staff back on a part-time basis but still get government support. So, if you can only bring employees back for 2 days per week, the Scheme will reimburse you for the 3 days where no work is available.
 

  • From 1 July 2020 the new Flexible Furlough Scheme opens to allow employers to bring staff back on a part-time basis.
  • Only those employees who have been furloughed or claimed through the Scheme by 30 June are eligible to use the Furlough Scheme from 1 July 2020. Exceptions were made for employees on maternity or paternity leave.
  • To use the Flexible Furlough Scheme, employers must have an agreement with staff in writing.
  • Employers should only claim for eligible employees as HMRC have made it very clear that they will be investigating claims.
  • For all claims made, records must be kept of the time worked by staff under the new Scheme.
  • Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and the actual hours worked.
  • Employers can make claims for a minimum period of 7 days.
  • The only exception to this rule is when the period claimed for includes either the first or last day of the calendar month, and an employer is claiming for the period ending immediately before it. Under these circumstances, the claim can be less than seven days.
  • Employers can still claim 14 days in advance.
  • From 1 July 2020, claim periods will no longer be able to overlap months. Employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this going forward.
  • Employers can vary the time worked by employees on a weekly basis but are advised to plan this at least a week in advance.
  • The Scheme will close on 31 October 2020.


HR:4UK will shortly be able to provide our clients with a new Furlough Agreement Form that has the flexibility to accommodate these new flexible working arrangements for staff with just one form.

Flexible Furlough Claim Errors

  • If you want to delete a claim in the online service, you must do this within 72 hours.
  • If you have made an error in a claim that has resulted in an overclaimed amount, you must pay this back to HMRC.
  • When you make your next claim you will be asked whether you need to reduce the amount to take account of a previous overclaim. Your new claim amount will be reduced to reflect the overclaimed amount and you should keep a record of this adjustment for 6 years.
  • If you are not making any further claims you must contact the HMRC who will give you a reference number and directed to make a payment.
  • For any underclaims made, contact the HMRC to amend the claim.

Contact the HMRC for furlough claim issues here.

What Are Your Options When Furlough Ends on 31 October 2020

Employers are advised to decide what their work demands will look like when the scheme ends on 31 October 2020 and what options they should consider for their business survival. Your options to consider are either:

  • Bring your employees back to work on their normal hours
  • Reduce your employees’ hours
  • Continue to furlough without the furlough grant
  • Consider other unpaid leave
  • Terminate their employment (normal redundancy rules apply to furloughed employees)
  • Be aware of the deadlines to start collective redundancy consultation during the furlough period, employees can potentially be on furlough during the notice period.
  • 1 August 2020: Consider starting collective redundancy consultation as employees could be on notice during furlough.
  • 15/16 September 2020: Last possible deadline to start collective redundancy consultation for 100+ redundancies on 31 October with notice and redundancy pay. This is 45 days prior to the end of the Furlough Scheme
  • 1 October 2020: Last possible deadline to start collective redundancy consultation for 20-99 redundancies on 31 October with notice and redundancy pay.
  • These dates may be earlier if an employer has a proposal at an earlier date.

 

Flexible Furlough Calculator


Managing the furlough arrangements for staff through the Flexible Furlough Scheme presents both administrative and financial challenges for businesses. This will require strict record keeping, all of which will need to be matched against often complicated calculations, to ensure your claims are accurate.

Don't worry as help is at hand! Our payroll experts here at HR:4UK have created the Flexible Furlough Calculator to easily calculate your Furlough claims. Your business can then simply submit their claim throug the HMRC portal, confident that these have been calculated in line with HMRC requirements for faster reimbursement.

Our Flexible Furlough Calculator comes pre-loaded with tested formulas and clear step-by-step instructions to help easily calculate your claims for the period covering 1 July 2020 - 31 October 2020, when the Scheme finally closes. Catering for both Fixed Hours and Variable Hours employees, the Calculator can be tailored to your specific needs with adjustments made for the number of employees on your payroll and an option for you to top up your furloughed employee's pay to 100% for e.g. if they are taking annual leave whilst on furlough leave.

The Flexible Furlough Calculator provides you a multitude of uses as it can also serve as part of your audit trail for the HMRC, who require all furlough payroll records to be kept for a minimum 5 year period.

So, if you would prefer to have peace of mind for calculating your claims, then please contact our Payroll Service today. Looking to outsource your payroll, then ask us about our 5-star rated Payroll Service and start saving your business time and money today! 

T: 01455 444 222 | E: info@hr4uk.com


Further Advice & Guidance


We are here to help offer you advice and guidance on any aspect of the Furlough Scheme and can be reached on the contact details below. Our website is an ideal place to visit for information regarding both the current Furlough Scheme (CJRS) here and the new Flexible Furlough Scheme or alternatively visit the government webpages GOV.UK and GOV.UK.
 

T: 01455 444 222 | E: info@hr4uk.com


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