Furlough Scheme New Rules
Further to our recent Covid 19 support update we are issuing further Furlough Scheme New Rules information below:
On Friday evening six updated guidance notes were issued. For the new version of the Coronavirus Job Retention Scheme “CJRS” (Furloughed Workers). The Furlough Scheme New Rules are summarised below
Summary
- The first point to note is that any employee not furloughed for three weeks prior to the 1st July will not be eligible for the new version of CJRS. The qualifying three weeks can be from any time between 1st March to 30th June
- We are used to claims being made up to 14 days in advance of pay day. Under the new CJRS the first claim for July can be made on 1st July. This means you cannot make an advance claim in June for a July pay period. If you run a weekly or perhaps fortnightly pay period that falls in the first week of July, the business will need to cover the wage liability until the grant is received given the 6 day turnaround for payment.
- Under the Furlough Scheme New Rules, employees not previously furloughed cannot be placed on furlough leave and a claim made under the new CJRS, the cutoff date was 10th The exception to this rule is employees coming back from parental leave, subject to them being on the company payroll at 19thMarch 2020
- Claims from July are limited to a maximum number of employees per claim equal to the maximum employees submitted on a previous claim period.
This provision has come out of nowhere and no fuss has been made about it, but, is probably the most important.
- The final day for making a June CJRS claim is 31st July 2020
- No NIC or pension can be claimed from August.
- The qualifying gross salary amount stays the same as we have previously been calculating, for most employees this will be based on their February 2020 payslip, average of 12 months’ pay or same period in 2019
- Claims from 1st July will need to be made in the same monthly period. The claims should match with the payroll submission made to HMRC.
You can’t claim from 1st July to 15th August say, one claim up to 31st July will need to be made and then 1st August to 31st August.
From the 1st July the same rules still apply for employees not being able to carry out any work or promotion of the business whilst on furlough leave.
New Calculation – Flexi Furlough Gross Pay
From 1st July employees can be bought back from furloughed leave for any number of hours. This can be in any working pattern to suit the business under the Furlough Scheme New Rules. For hours not worked, the employee can remain on furlough pay for those hours and the business can still make a CJRS claim.
Calculation of follows:
Gross monthly salary £4,000, 80% or capped at £2,500
Normal weekly hours 37.5 (calculated on last pay period prior to 19th March)
Monthly hours 37.5 / 7 calendar days, multiply by calendar days in the month 31 = 166.07
Rounded up (always) 167 hours
Employee works 50% of normal hours – 83.5 paid at employee’s full pay = £4,000 x 50% = £2,000
Furlough pay = £2,500 x 83.5 then divided by total hours (167) = £1,250
Gross employee pay for the period = £3,250
Claim for CJRS = £1,250
New Calculation under the Furlough Scheme New Rules– Flexi Furlough Employer’s National Insurance
If the employment allowance of £4,000 has not yet been fully utiltised, this will need to be used up first before being able to claim any Employers NIC under the CJRS.
If the allowance has been utiltised, the following calculation applies:
NIC Monthly Threshold £732
Total monthly hours 167 per gross pay workings
Furloughed hours 83.5 per gross pay workings
CJRS threshold £732 x 83.5 hours then divided by total hours (167) = £366
Furlough Gross Pay £1,250
CJRS claim for NIC £1,250 – £366 then multiplied by 13.8% = £121.99
New Calculation – Flexi Furlough Employer’s Pension
Under the Furlough Scheme New Rules ,we must use the lower level of qualifying earnings “LLQE” regardless of the pension scheme the business uses for their auto-enrolment scheme.
LLQE threshold £520
Total monthly hours 167 per gross pay workings
Furloughed hours 83.5 per gross pay workings
CJRS threshold £520 x 83.5 hours then divided by total hours (167) = £260
Furlough Gross Pay £1,250
CJRS claim for NIC £1,250 – £260 multiplied by 3% = £29.70
If you are on weekly pay, the above threshold amounts (£732 and £520) will need to divided first, by the calendar days in the month and then multiplied by the 7.
Fortnightly pay, the above threshold amounts (£732 and £520) will need to divided first, by the calendar days in the month and then multiplied by the 14.
Four weekly pay, the above threshold amounts (£732 and £520) will need to divided first, by the calendar days in the month and then multiplied by the 28.
Phased Employer Contribution
Assuming the hours and amounts remain the same in the worked examples above:
July 2020 HMRC will reimburse £1,250, £121.99 and £29.70 = £1,401.69
August 2020 HMRC will reimburse £1,250
September 2020 HMRC will reimburse £1,093.75, employer tops up £156.25 to £1,250
No reimbursement for employer’s NIC or Pension
October 2020 HMRC will reimburse £937.50, employer tops up £312.50 to £1,250
No reimbursement for employer’s NIC or Pension
If you have any questions about the Furlough Scheme New Rules, please do get in touch with the team. We are all here and happy to help.
