Albert Goodman LogoCORONAVIRUS JOB RETENTION SCHEME ———-  download the pdf AG1435 Flexible Furlough Scheme
The Job Retention Scheme (JRS) ends on 30 June 2020 and will be replaced by the Flexible Furlough Scheme (FFS). The FFS will enable previously furloughed staff to work on a reduced hour basis from 1 July, helping businesses to slowly return staff to the workplace. Employers will also start to contribute towards the furlough payments from 1 August for the time not worked, despite employees continuing to receive a guaranteed amount of 80% of their normal pay, capped at £2,500, until the scheme finally ends on 31 October 2020.
Whilst we are still dealing with queries on the operation of the JRS, we were all slowly coming to terms with its complexities, the ever changing guidance and the differences between it and the two Directions, holiday and notice pay issues, working out whether someone should be a fixed or variable rate worker, whether their overtime and commissions were discretionary or non-discretionary, what to do with car allowances, how to apportion pay when going on furlough or returning, how to deal with claim errors, concerns over employment law issues, whether businesses were correct to claim, worries about getting claims wrong and how HMRC would then deal with this ……the list goes on!
However, in short, we were coping: and then the Chancellor announced the introduction of the FFS!
There is little information on the FFS and, although we did expect the detail to be released by the end of May, this will not be issued until 12 June – no doubt in the evening (it is a Friday, after all), following the pattern for all major JRS updates thus far. There is no doubt that the Government are to be congratulated, despite there being winners and losers, on getting the JRS off the ground from nothing, in so little time, and that it’s helped millions of businesses and employees (£15.6 billion claimed by 1 million employers for 8.4 million workers at 24 May), but the FFS looks set to make the operation of the JRS look like a walk in the park and the additional complexities and added cost burden for employers will inevitably force businesses into considering redundancies far sooner than they thought they might have to.
FFS – THE KEY POINTS
Whilst the detail on the FFS will be released on 12 June, the key points announced so far are:
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From 1 July, previously furloughed employees will be able to work reduced hours, depending on the business needs, and be furloughed for their remaining ‘usual hours’.
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They will be paid their normal contracted rate, which has to be at least the new NMW rate introduced from 1 April, for any hours worked, as well as prorated furlough pay for any of their ‘usual hours’ not worked, based on the current rate of 80% of their reference pay, capped at £2,500.
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The government will reimburse the furlough payments, employer’s NIC and pension contributions on the furlough payments, as it does under the JRS, until the end of July.
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From 1 August, employers will have to cover all NIC and pension amounts, which are estimated to be about 5% of the furlough cost, in addition to having to pay for any hours worked by the employees.
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From 1 September, in addition to the NIC/pension costs on the furlough pay and costs for all hours worked, employers will also effectively pay 10% of the furloughed wages as the contribution from the Government will reduce to 70% of the reference pay, pro rated for hours not worked, capped at £2,187.50 per month.
FLEXIBLE Furlough SCHEME
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From 1 October, the employer’s contribution to the furlough pay will effectively be 20%, as the Government’s contribution will reduce to 60%, pro rated for hours not worked, capped at £1,875 per month.
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The FFS will end on 31 October.
In terms of making a claim under the FFS:
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Claims can be submitted from 1 July and HMRC will need to update its online calculator to be able to deal with the revised claim calculations. Further details are due on 12 June.
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Employers will have to submit details of hours worked and usual hours that would be worked, as part of the claim process, presumably to enable HMRC to start checking that claims are not being overstated.
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Claims have to cover a minimum of one week and no claim can overlap the end of any month, in order to help with the checking process.
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Claims for any pay period will be capped by the maximum number of employees claimed in any one claim period under the JRS.
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No new employees, not previously furloughed under the JRS, can be included under the FFS.
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No employers may make a claim under the FFS if they have not already made a claim under the JRS.
URGENT ACTIONS NEEDED UNDER THE JRS
The last two points mean urgent action is needed by employers under the JRS.
The JRS will close to new claimants on 30 June. Many employers have been paying furloughed staff but have not yet submitted any claims. If this is you, you need to make certain you file at least one claim under the JRS by 30 June, otherwise you will miss out on the JRS and the FFS, as it’s a condition of the FFS that you have previously made a claim under the JRS.
If you have already made claims under the JRS, you will have until 31 July to complete all your claims to 30 June. If you have any pay periods that straddle the end of June, you will need to split the period between the JRS and FFS and make two claims for that period. It is not clear if the ability to amend prior JRS claims will be available by 31 July (the portal still lacks this functionality) or whether it would be better to make any adjustments in subsequent claims prior to 30 June, despite this being contrary to HMRC’s guidance, in case the opportunity to claim any additional JRS amounts is lost post 31 July.
The FFS can only be used for employees who have been furloughed under the JRS and have at least three weeks of JRS furlough under their belts by 30 June. Therefore, if you are planning to reduce anyone’s hours from July, who has not already been furloughed, the last date you will be able to furlough them from is 10 June, with their furlough period lasting until at least 30 June.
Finally, it appears as though for claims submitted, 40% of employers have not been claiming for their employer’s NIC or pension contributions, and so claims for these should be made by 31 July under the JRS, otherwise it looks as though this entitlement may be lost.

CONCLUSION
The JRS was complex and it looks like the FFS will be even more so, and so please do get in touch if you would like help with your grant applications. We will provide a further update when more details are announced.
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