Unsolicited telephone calls misusing our name - We do not nuisance cold call -
Have a question? Call us on 0800 1979 345
This article was published on July 13th, 2020
The Treasury Direction which legally underpins the Coronavirus Job Retention Scheme (CJRS) has recently been updated. The new Direction sets out the rules that now apply from 1 July 2020, which allows for ‘flexible furlough’ arrangements, until 31 October 2020, when the scheme ends.
In summary the Treasury Direction clarifies a number of points:
The new Direction confirms that the cut-off date for making claims under the original CJRS, (as set out in the previous Directions and in force until 30 June) is now 31 July.
It also confirms our advice in early June, that businesses will only be able to claim from 1 July if they have previously made a claim under the original scheme by 31 July in respect of an employee who has been furloughed for a minimum of three weeks beginning on or before 10 June. There are exceptions to this which you will note below.
The number of employees who can be claimed for post 1 July cannot exceed the maximum number in any one claim made for furlough periods prior to 1 July – the new Direction refers to this as the “high-watermark number”.
The new Direction confirms the exception to the 10 June cut-off and the “high-watermark number” for family leave returners and armed forces reservists. There is a similar exception where a TUPE transfer takes place after 10 June 2020, in relation to transferring employees who were furloughed by the transferor under the original CJRS (but who cannot satisfy the 10 June cut-off as regards the transferee). The Direction confirms that the number of these previously-furloughed, transferring employees is added to the transferee’s cap in the same way as “returning employees”.
Previously, the Guidance was not clear on whether the agreement to flexible furlough needs to be full written agreement with employees as opposed to written confirmation / letter as has been applicable for full furlough.
We have already drafted a number of detailed agreements on flexible furlough, the new Direction confirms the requirement to reach agreement on flexible furlough arrangements but says that the agreement only needs to be confirmed in writing by employers (which may be in electronic form such as an email). Therefore any flexible furlough arrangements require communication and letters/ emails to employees to evidence agreement. A record of the agreement must be retained by the employer until at least 30 June 2025. As with full furlough, the agreement for flexible furlough can be by means of a collective agreement.
Employers should note that there is a new requirement that the agreement must have been made before the beginning of the period to which the CJRS claim relates – and must not be made retrospectively. However, the Direction confirms that an agreement can subsequently be varied.
The new Direction also sets out in great detail the means of calculating the amounts payable by an employer and those that can be claimed under the CJRS in respect of an employee who works part-time on flexible furlough. Businesses will need to examine the methodology in detail with payroll to ensure that they are understood and align with the system.
One point on which urgent clarification is being sought is that the new Direction now says that the purpose of the CJRS is to “continue the employment of This new wording appears to contradict the Employee Guidance on the CJRS which still states “your employer can still make you redundant while you are on furlough”. HMRC have apparently referred this question to a specialist team. This is clearly of significance to some employers who are presently exiting people or are planning to and we will of course keep it under review.
If you have a question about any of the issues raised in this blog post or require assistance in any employment law or HR matter, please contact our Employment Team on 01625 507 506 or email [email protected].