The Covid-19 furlough scheme has been effectively revised into a new scheme running from 1 July until 31 October, but this comes with a level of complexity that did not exist in its original guise.
Much of the complexity arises because employers can now bring furloughed employees back to work flexibly on a part-time basis, while still being able to claim under the scheme for the hours not worked.
One very important change is that claims cannot now straddle months. This is because the scheme rules will change from month to month.
From 1 July, only employees who were furloughed under the original scheme ending on
30 June are eligible for further grants. However, the minimum three-week furlough period has now been removed.
For flexibly furloughed employees, employers will have to calculate the employee’s:
• Usual hours – There are two different calculations depending on whether an employee works fixed or variable (or zero) hours. The calculation can be confusing and may not always deliver the obvious answer, especially for employees on variable or zero hours.
• Actual hours worked – This could be an issue for directors who have no fixed hours. Accurate record keeping will be essential for both employees and directors. For hours actually worked, employees must be paid their normal wage.
• Furloughed hours worked – Simply calculated as usual hours less worked hours.
A new written agreement is required for flexibly furloughed employees to confirm the new arrangements.
When claiming for flexibly furloughed employees, employers should not claim until they are sure of the exact number of hours that will be worked during the claim period. If a claim is made in advance and fewer hours are worked than expected, a refund will have to be made to HMRC.
With certain exceptions, the maximum number of employees included in a furlough claim from 1 July onwards cannot exceed the highest number of employees included in any claim up to and including 30 June.
HMRC has provided various worked examples of how to calculate an employees' wages, NICs and pension contributions.