A new flexible furlough scheme will close to new entries on 1 July, but the real deadline is 10 June.
From 1 July, no new employees can be furloughed for the first time. This means any employee/director who has not previously been furloughed will have to begin by 10 June in order for 21 days (3 weeks minimum) of furlough to be completed by the end of the old scheme on 30 June.
No minimum furlough
From 1 July, employees/directors can be furloughed for any length of time, even down to a few hours, and work the rest of the pay period, subject to the employer gaining their agreement in writing.
Changes to the government grant payments
The usual financial government support for furloughed workers continues for July and begins to taper away from August until the scheme’s planned closure in October.
- July – 80% wage support up to a £2,500 cap, plus employer NIC and 3% pension costs on furloughed hours
- August – 80% wage support up to £2,500, but no employer NIC or pension costs covered
- September – 70% wage support up to £2,187.50, but no employer NIC or pension costs covered
- October – 60% wage support up to £1,875, but no employer NIC or pension costs covered
Furloughed workers will still need to be paid at least 80% of their usual wage
Any furloughed workers are still paid 80% of their usual wages until October. This means you will need to top up the government grants by 10% in September and 20% in October. You can still choose to top up any wages to their usual 100%.
Workers who return to work will need to be paid at their contracted rates. There will be no government support for hours worked by employees or directors.
Reporting your working hours
From 1 July there is a requirement to report working hours. We have no further government advice on how the new rules will work for part-time furloughed directors or employees and what is considered ‘normal’ working hours.
My thoughts are this will be a (pro-rated) difficult calculation for any company director. The accompanying government factsheet explains that further guidance on flexible furlough and how employers should calculate claims will be published on 12 June.
New national minimum wage (NMW) rates for employees
Any employee returning to work for the first time since 1 April 2020 will need to be paid at or above the new NMW rates.
Company directors and secretaries are excluded from NMW regulations.
Payroll reporting
Payroll will continue to be reported and any PAYE and statutory pension payments paid as usual.
There will need to be two payslip calculations for any workers who are paid less than their normal pay who are partly furloughed and partly working.
For maximum tax efficiency, any company directors and secretaries should continue to be paid in full rather than the reduced furlough rate.
