15 June, 2020
From 1 July 2020, the FFS will allow employers to bring back employees steadily, on varied working patterns and/or reduced hours. If an employer utilises the FFS, it will be required to pay its employees in full (100%) for the hours that are worked but it will be able to recover wages for the hours the employee does not work, which they would usually have worked from the Scheme.
To calculate the number of furloughed hours, employers must first identify the employees "usual hours" as outlined below, which will be easier in some cases than others. Then employers must subtract the number of hours actually worked within the claim period to identify the number of hours furloughed for the purposes of the Scheme.
While employers may claim the grant in advance of the hours worked, we would suggest avoiding this to ensure that the hours are claimed correctly and to avoid overpayment and/or underpayment of the grant, which will need to be paid back to HMRC.
Employers must enter into a new written agreement with the employees (in some cases following collective agreement with trade unions), outlining the agreed flexible working arrangement. Clear written records must be kept of all hours worked and all hours to be claimed through the Scheme. These records should be kept for at least five years.
Employees can enter into a flexible furlough agreement more than once, which suggests that every time the working hours/pattern is changed, this should be reflected in a written agreement and the pattern can change provided it lasts for at least seven calendar days each time.
During the furloughed hours, the same rules apply as in the original CJRS and employees cannot undertake any work for you and/or provide any services to you.
There is an online calculator to assist employers to work out the calculations for each pay period, including FFS arrangements - this can be found using the following link https://www.tax.service.gov.uk/job-retention-scheme-calculator.
However, please see a breakdown of the steps below:
If an employee was on annual leave, statutory leave or off sick at any time before 19 March 2020, the usual hours should be calculated as if that leave had not been taken.
You should include any of leave for which the employee was paid at their full contracted rate (i.e. annual leave) and any overtime where pay was not discretionary.
Use the calculations above if possible and if not, calculate an estimate based on the number of pieces and the average rate of work per hour.
Further guidance on working our "usual" hours can be found at https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme.
While the introduction of FFS arrangements may assist employers to re-open their businesses with a reduced workforce, if redundancies are envisaged, employers must be mindful of the gradual increased contributions associated with the Scheme and consider whether these costs can be sustained by the business. If not, employers may need to begin consultation sooner rather than later (bearing in mind collective consultation requirements and time scales which still apply).
Employers should also be mindful that discrimination laws continue to apply and employees should not be treated less favourably because of a protected characteristic, when making the decisions about who should and shouldn't return to work.
It is essential that clear records are kept in respect of FFS arrangements and the guidance indicates that each time the arrangement is changed, this will need to be reflected in a written agreement. While the guidance suggests that employees do not have to respond to confirmation of the arrangements, we would advise that each agreement is signed by both the employer and employee to reflect that an agreement was reached.
If you have any queries arising as a result of this briefing, or require any advice on the Scheme changes, please do not hesitate to get in touch.
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