The third Treasury Direction on the furlough scheme was released on Friday, confirming previously known details about the upcoming flexible furlough scheme whilst also clarifying a few areas.
We have set out key details to be aware of below:
- Organisations can place staff on flexible furlough if they have a qualifying PAYE scheme under the original rules and had made a claim relating to all furlough periods up to June 2020 by end of July 2020
- Full furlough can continue after 1 July
- To be furloughed from 1 July, the employee needs to have served a minimum three-week furlough period between 1 March and 30 June except for those who started family leave or reserve forces mobilisation before 10 June and returned after 10 June. Where the employee is a ‘returner’, they must meet all the normal eligibility requirements eg on payroll and have a RTI submission made on before 19 March (or 28 February if made redundant and brought back on furlough)
- Flexible furlough agreements can be agreed in writing (with a signature) or confirmed in writing by the organisation – no signature is needed by the employee but, in this case, agreement should be sought in a discussion beforehand, and the letter just confirms the prior agreement
- Agreement must be made before the period to which the claim relates, but may subsequently be varied to reflect any variation agreed between the organisation and employee during the period to which the claim relates
- Although the claim period is generally minimum seven days, there are a couple of instances where it can be less. Permitted periods of less than seven days are called ‘orphan periods’ and include the start or the end of the month which doesn’t fit into a seven-day cycle because claims cannot straddle two calendar months from the end of June into July.
- There is a maximum number of employees to be furloughed in each claim period – it cannot be higher than the maximum number of people claimed for in any period before the end of June.
The direction also confirms the way that an employee’s usual hours and furlough pay should be calculated. It outlines the proportionate decrease in the maximum cap that can apply to the grant for furloughed hours e.g. if employee is furloughed for 60 per cent of their normal hours, the maximum they can get from the scheme is 60 per cent of £2,500 per month.
One area of revision in the new direction is with regard to the purpose of the scheme. It now says "integral to the purpose of the CJRS is that the amounts paid to an employer pursuant to a CJRS claim are used by an employer to continue the employment of employees in respect of whom the CJRS claim is made whose employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limit its further transmission."
An interesting point in this is the reference to using the scheme to continue the employment of employees. This maybe read to discount claims to the scheme for those who have been made redundant and are serving their notice, where the employer is claiming from the scheme for their notice pay. However, the Government guidance confirms that employees can be made redundant when they are on furlough. It may be that further clarification is needed on this point.
The latter part of this inclusion on preventing and limiting further transmission appears to confirm alignment with the current guidance on furlough which allows those who are shielding, for example, to be furloughed.
HR-Inform will continue to update current guidance and model documents on the flexible furlough scheme as more information is released by the government. Organisations should remember that it comes into force from Wednesday 1 July.