CJRS update

Further guidance issued for furlough scheme extension.

We noted in our last article on the Coronavirus Job Retention Scheme that the government was due to publish additional guidance on the new "flexible furlough" arrangements from 1 July and the way in which the CJRS will be phased out between July and October. That was duly published on 12 June.

No new employees: Although the scheme will run until the end of October, it has been closed to new employees going onto furlough from the end of June 2020. In practice this meant that only employees furloughed on or before Wednesday 10 June could qualify for the remainder of the scheme (because later entrants would not have completed their 21 day minimum furlough period before the scheme closes to entrants on 30 June 2020).

Exception for family-friendly leave: There is one exception to the closure rule. Employees who have not yet been furloughed because they have been on family-friendly leave, and who return to work after 10 June, can still be furloughed.

Claim periods: The government’s financial contribution under the revised scheme is changing from month to month. As a result, claims need to be confined to single months, and cannot span two different months going forwards. A claim must be for a minimum period of seven days.

Total flexibility: Unlike the initial scheme which prohibited all work while an employee is furloughed, the revised scheme is designed to permit almost total flexibility – any working pattern, whether structured as days or part-days, is permitted from 1 July. The only exception to that is in relation to employees who have started a new 21-day furlough period after 10 June but before 1 July (e.g. those if they have previously been on furlough and are "on rotation"). They must remain fully furloughed until that furlough period has expired. Note that flexible furlough is not mandatory; employers will be able to keep employees on full furlough until the final end of the scheme on 31 October if they wish. The employer is required to pay as normal for the days worked but the employee can still qualify for furlough on the remaining days not worked. 

Accounting requirements: The guidance contains quite complicated rules for calculating the grant due for "flexibly" furloughed employees. There is an updated calculator and some helpful examples to assist employers. In each case, employers must work out each employee’s "baseline" of "usual hours" against which the hours actually worked can be compared. That may not be straightforward where hours vary, or where additional hours are expected to be worked depending on client/customer demand. The guidance notes that an employer should not claim until it is sure of the exact number of hours an employee will have worked during the claim period – payroll and financing teams may find this a challenging aspect of the scheme. 

Records: Note that records of usual hours, actual hours and the "baseline" methodology must be retained for six years (not the five years for which furlough agreements/confirmations must be kept).

Worker agreements: Organisations that have already used the CJRS will be familiar with the need to have confirmed any period of furlough in writing; commonly done in a furlough agreement. The new guidance complicates this obligation somewhat, stating that, for flexibly furloughed employees “you’ll need to agree this with the employee (or reach collective agreement with a trade union) and keep a new written agreement that confirms the new furlough arrangement”. It is not clear whether this means employers and employees need to reach a formal agreement before a flexible arrangement can be put in place, or whether the decision to furlough (whether fully or flexibly) remains the employer’s alone and mere confirmation to the employee is sufficient. The prudent approach remains to engage in discussions at an early stage, and conclude a written agreement wherever this is commercial practicable. 

The revisions to the scheme will be welcomed by many employers, although the administrative burden and additional costs will lead many to look at other alternatives, such as redundancy. To discuss your specific requirements, please speak to your usual Macfarlanes contact.

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