Following the recent updates announced regarding the government’s Job Retention Scheme, which are to become effective from 1 July 2020, and which we detail here, the government’s written guidance has been updated.

The Scheme is to continue to provide for furloughed employees receiving 80% of their monthly salaries up to a maximum of £2,500 until 31 October 2020. However, from 1 August employers are required to contribute to the cost of furloughed employees in the proportions detailed in our earlier insight piece.

The update confirms that employees must have been furloughed for at least three weeks prior to 30 June 2020 in order to be eligible for furlough from 1 July 2020. This means, if an employee was not previously furloughed on or before 10 June, they will not now be eligible under the scheme. There is an exception to this rule for employees returning from maternity, paternity or shared parental leave who may be furloughed immediately on their return to work as long as they were on the employer’s payroll prior to 19 March 2020 and the employer has already made use of the Scheme.

Employees who are furloughed but work on a flexible basis from 1 July must be paid their full salary rate for the time they are working, unless other arrangements have been contractually agreed. No claim under the furlough scheme may be made for hours worked by the employee and employers will have to bear the cost of National Insurance and pension contributions in respect of these periods. A claim can be made in respect of any normal hours of work during which the employee does not work in the claim period. If, for instance, an employee usually works five days per week and from 1 July while furloughed they work 0.5 days per week, their employer will need to pay them in full for half a day per week. A claim under the Scheme can be made for the other 4.5 days. It is therefore necessary to be able to work out the proportion of hours for which an employee will be furloughed for each period to which a claim relates. A calculator tool is provided by the government to assist in calculating claim amounts.

Where employees are to work flexible hours while furloughed, employers should review and update where necessary the furlough agreements signed by furloughed employees to accurately reflect new arrangements.

From 1 July there will be no minimum or maximum period of furlough. The minimum reference period for claims will be one week though.

The new guidance for employers now confirms that employers must top employee furlough pay up to 100% while employees are using annual leave. This information had previously appeared in the employee guidance only. Our previous piece on holiday and furlough can be found here.

In line with standard tax obligations, employers must keep, for at least six years, a copy of all records relating to employees furloughed including:

• the amount claimed and claim period for each employee;
• the claim reference number;
• the basis for calculation of the claim usual hours worked, including any calculations made for employees who have been furloughed on a flexible basis; and
• actual hours worked by employees flexibly furloughed.

The newly published guidance can be found here.