Be ready for furlough rules change – 1 May
New furlough scheme rules come into force from the beginning of May and will last until 30 September, creating a new round of challenges.
The new guidance to the Coronavirus Job Retention Scheme (CJRS) includes how to calculate furlough pay for newly-eligible employees who could not claim from 1 November 2020 but were reported on a Full Payment Submission by 2 March 2021.
So, a claim can be made for the first time for any period 1 May 2021 onwards.
Up to and including 30 June 2021 you can claim, and must pay the employee, 80 per cent of their reference pay for the furloughed hours subject to the monthly, daily or weekly cap.
From 1 July 2021 the scheme will taper off, with employers making a 10 per cent contribution to wages in July, and 20 per cent in August and September. The employee though must still receive the full 80 per cent.
You can choose to top up your employees’ wages above the minimum 80 per furlough pay amount but you do not have to. Employees must not work or provide any services for the business during hours which they’re recorded as being on furlough, even if they receive a top-up wage.
If your employee is flexibly furloughed, which means they’re working reduced hours rather than stopping work completely, you must pay them their full current contracted rate for any hours they work. You cannot claim a grant towards the hours the employee works.
For statutory leave and wages for variable pay employees up to and including 30 April 2021, continue to count the wages and calendar days that the employee was not receiving normal pay due to being:
- On sick leave and receiving only SSP
- On any family related leave and receiving only statutory pay
- Receiving less than full pay after SSP or a family-related statutory payment has expired (referred to as ‘reduced rate leave’ in the guidance and legislation)
For claim periods from 1 May 2021 onwards, discount the days and pay related to periods of sick, family-related leave or reduced-rate leave unless the only wages received during their reference period were for these kinds of leave in which case they will have to form the reference pay.
For fixed rate employees, who have any hours on annual leave, sick leave or statutory leave in their reference pay period, do not make any adjustment to their usual hours. For example, for someone who works 40 hours a week who has 10 hours of unpaid leave, their usual hours remain at 40 hours per week.
You must keep a copy of all records for 6 years, including:
- the amount claimed and claim period for each employee
- the claim reference number for your records
- your calculations in case HMRC need more information about your claim
- usual hours worked, including any calculations that were required, for employees you flexibly furloughed
- actual hours worked for employees you flexibly furloughed
For help and advice with related matters, please get in touch with our expert payroll team today.
