Coronavirus Job Retention Scheme (CJRS) phase 2 frequently asked questions

When the CIPP refers to the Coronavirus Job Retention Scheme phase two, this relates to how the scheme will operate from July 2020 - October 2020, when the scheme will close.

From July, employers are able to bring employees back to work on a part-time basis, whilst still accessing the grant for any of their 'usual' hours not worked. This is commonly being referred to as 'flexible furloughing'

From August onwards, the government will be taking a tapered approach to the payment of the grants under the scheme, reducing the amount it contributes to payment for 'usual' hours not worked.

In addition to the previous record-keeping requirements, for flexibly furloughed employees, employers will need to keep a record of the usual hours worked with any associated calculations, and the actual hours worked for a minimum period of six years.

Yes - from 1 July 2020, employers will no longer have the option to submit claims that overlap, or straddle, calendar months.

They will need to ensure that claim periods start and end within the same calendar month. If, for example, they had a claim period that included 21 June 2020 - 11 July 2020, one claim would need to be made in relation to 21 June 2020 - 30 June 2020, and a separate one relating to 1 July 2020 - 11 July 2020.

In addition to the information that employers needed to make a submission through the online service for furloughed staff, for flexibly furloughed employees, they will also need:

• The number of usual hours an employee would work in the claim period
• The number of hours an employee has worked, or will work in the claim period
• To keep a record of the number of furloughed hours the employee has been furloughed for during the claim period

As with previous claims, for any businesses submitting claims for 100 or more furloughed employees, they will need to upload a file, and there will be the additional requirement to include:

• Hours they actually worked in the claim period
• Usual hours worked in the claim period

HMRC will provide a new template for use for claims from 1 July 2020 in due course.

Yes, there are several key dates that employers should be mindful of in consideration of the Coronavirus Job Retention Scheme phase two.

10 June 2020 - This is the date by which employees who had not previously been placed on furlough needed to have been furloughed by, in order to qualify for the scheme from 1 July 2020 onwards. This is to ensure they met the minimum three-week furlough period required by the previous version of the scheme.  Different rules apply for those returning from a period of parental leave.

1 July 2020 - The date that employers can begin submitting claims relating to the new version of the Coronavirus Job Retention Scheme via the online service.

31 July 2020  - This is the deadline by which employers must submit claims relating to periods ending on, or before, 30 June 2020, through the online service.

31 October 2020  - The scheme closes.

For claim periods relating to July 2020, employers can claim for the employer's NICs and pension contributions on an employee's furloughed hours. The associated on-costs for any worked hours will need to be paid for by the employer.

From August 2020 onwards, the employer can no longer reclaim any employer's NICs or pension contributions for furloughed hours, and will be responsible for paying these amounts themselves.

For the purposes of calculations for claims relating to July 2020:

Employer NICs

A claim must not exceed the amount of employer's NICs that are due.

If an employer claims the Employment Allowance, then this must be offset prior to making a claim through the CJRS.

Employers must:

• Establish the adjusted secondary NICs threshold - £169 per week / £732 per month / £8,788 per year

This must be divided by the number of days in the pay period, and then multiplied by the number of days in the flexible furlough claim.

Where employees are flexibly furloughed, employers must also divide this by the number of 'usual hours' in the flexible furlough claim and multiply by the number of furloughed hours in the flexible furlough claim.

• Use the adjusted secondary NICS threshold to calculate the amount for reclaim

Use the amount being claimed for employee wages, deduct the relevant adjusted secondary NICs threshold and multiply by 13.8%.

This is the figure that can be reclaimed for claims relating to July 2020 in terms of employer NICs. However, if an employer is claiming employment allowance, this must be offset first, before calcuating and making a claim under CJRS.

Employer pension contributions

A claim must not exceed the amount that an employer actually contributes to an employee's pension.

Employers must:

• Establish the relevant Lower Level of Qualifying Earnings (LLQE) - £120 per week / £520 per month / £6,240 per year

This must be divided by the number of days in the pay period, and multiplied by the number of days in the furlough or part-time furlough claim.

Where employees are flexibly furloughed, employers must also divide this by the number of 'usual hours' in the flexible furlough claim and then multiply by the number of furloughed hours in the flexible furlough claim.

• Use the adjusted LLQE to calculate the amount of grant that can be reclaimed

Use the amount being claimed for employee wages, deduct the adjusted LLQE and multiply by 3%.

This is the amount that can be reclaimed for claims relating to July 2020 in terms of employer pension contributions.

Yes, as with original furlough agreements, employers will need to discuss and agree flexible furlough work or shift patterns with impacted employees. There will need to be a written record of this - either emails or letters - which must be retained by the employer for a minimum period of five years.

No, there is no requirement for employers to place all employees on flexible furlough from  1 July 2020, and they can continue to fully furlough staff if they wish. This is true until the end of the scheme's closure on 31 October 2020. Employers should, however, be mindful of the changes to the way in which the government will fund the scheme from August 2020 onwards.

Employees should not complete any work for the employer that placed them on furlough for the hours that they have been recorded as being on furlough. If employees are still fully furloughed then no work should be carried out for the employer that furloughed them, but they can attend training sessions. They may also volunteer for another employer, and, if their employment contract permits, carry out work for another employer.

No. Under the previous-style CJRS, furlough periods had to be a minimum of a three-week period however, under the second phase of CJRS, claim periods must not be less than seven calendar days but do not need to last for three weeks. The exception to this is where six days or fewer relate to a previous month and so the claim would need to be split into two different claims.

If an employee who has previously been furloughed is being furloughed for a period before 1 July 2020, then this would still need to observe the three-week minimum furlough period, even if that means that the end date of furlough extends beyond 1 July 2020.

The calculation for 'usual hours' worked will depend on the working pattern of an employee.

Fixed

For an employee with a fixed working pattern, the employer would calculate 'usual hours' on the basis of the  hours the employee was contracted to work at the end of the last pay period ending on, or prior to, 19 March 2020.

Variable

For an employee with a variable working pattern, the employer would calculate 'usual hours' on the basis of the higher of either:

• The average number of hours worked over the course of tax year 2019-20
• .The corresponding calendar period in the tax year 2019-20

HMRC guidance provides working examples of how to calculate 'usual hours' for both employees with fixed, and employees with variable hours - http://ow.ly/H7Rb30qQaCw .

Employers need to distinguish between the minimum amount that should be paid to employees for their furloughed hours, and the amounts that they can claim through the CJRS, as the government funding of the scheme begins to change. Employers can choose to pay more to employees for time on furlough but this will not impact the reclaim amount.

Employers need to initially calculate the employee's minimum furlough pay, which is the lesser of:

• 80% of usual wages
• Maximum wage amount which is capped at £2,500 per month

If an employee is flexibly furloughed, the minimum furlough pay will depend on their 'usual worked' hours and their furloughed (non-work) hours.

Using the lesser figure of 80% of usual wages or the maximum cap, employers should multiply this figure by the employee's furloughed hours, and then divide by the employee's 'usual hours.' An example may help to clarify:

An employee works 35 hours per week over five days (7 hours per day) they are paid £3,825 per calendar month. This does not change and was relevant for the last period ending on or before 19 March 2020.

The maximum that should be paid and currently can be claimed is 80% to a cap of £2,500 per month, and that is based on all hours being non-work hours. And this still applies under flexible furlough rules where there is no return to work.

But where there is a return to work for some hours, the cap has to be pro-rata to non-working time.

In our example the employee is returning to work for one day per week - 7 hours, and remaining furloughed for 4 days - 28 hours

First we need to calculate whether 80% of our pay exceeds the cap:

3,825 x 80% = £3060 (more than the cap) so the cap will apply of £2,500 and as this is the lesser amount we start with this figure as we continue to calculate the minimum pay for furloughed hours.

1. Multiply by employee’s furloughed hours = 28
2. Divide by the employee’s usual hours = 35

£2,500 x 28/35 = £2,000

£2,000  is the minimum amount you must pay for the time they are recorded as being on furlough – employer can choose to pay more.

For periods ending on, or prior to, 31 August 2020, employers can claim for the full amount of the minimum furlough pay.

For claim periods relating to September 2020, the claim an employer can make will reduce to 70 per cent capped at £2,187.50 and from October 60 per cent capped at £1,875. the employer will top up the difference in the payment made to the employer.

The government is taking a tapered approach to the way it funds the CJRS. The following table provides a good overview of how the government will fund the scheme over the next few months:

From 1 July 2020, the maximum number of employees that employers can submit a claim for under the CJRS must not exceed the amount claimed for in a previous claim relating to a period ending on, or before, 30 June 2020.

To provide a working example of this  - if an employer claimed for 60, 40 and 50 employees in previous claims, then the total number of employees they can claim for, for claims relating to periods starting on, or after, 1 July 2020, would be 60 employees, and not the total of 150 employees.

There are exceptions to this rule. If employers have employees who are returning from a period of parental leave after 10 June 2020, then they may add that number of employees to the previous maximum claim number, so, using the previous example, this would be 60 employees + any employees returning from a period of parental leave.

The same applies for employees transferred under TUPE, so if employees of a previous business transferred after 10 June 2020, they could be added to the claim, on top of the previous maximum claim number, so  using the same example, this would be 60 employees + any employees transferred under TUPE or PAYE business succession rules.

Employees must have been furloughed prior to 30 June 2020, and in order to observe the three-week minimum period required under the scheme previously, this meant that they would have had to have been placed on furlough by 10 June 2020 . 

However, there is an exception for employees returning from statutory parental leave after 10 June 2020, who can still be furloughed, on the proviso that:

• Their employer had previously submitted a furlough claim between 1 March 2020 and 30 June 2020
• The employee being furloughed for the first time after 10 June 2020 commenced maternity, shared parental, adoption, paternity or parental bereavement leave prior to 10 June 2020 and returned from the leave after 10 June 2020
• The employee was on PAYE payroll on, or prior to, 19 March 2020, and included in a Real Time Information (RTI) submission to HMRC on or before the same date

As the scheme closes on 31 October 2020, employers will be required to decide whether or not an employee can return to their normal hours. In instances where they can't, it may be necessary to consider reducing their hours, or in some scenarios, their employment may need to be terminated. Employers are reminded that normal redundancy rules apply to furloughed employees.