COVID-19: Flexible Furlough Scheme Legislation Published

On 26 June 2020, government published a new Treasury Direction (version 3) to govern the extended furlough scheme. The Direction replicates the previous Directions on the Coronavirus Job Retention Scheme (‘CJRS’) and mirrors the information set out in the government’s recently updated guidance.

• The new Direction confirms that the original CJRS will end on the 30 June with the amended CJRS, which allows for flexible furlough arrangements, to apply from the 1 July. The scheme will close on 31 October 2020.
• The agreement between employer and employee to place the employee on flexible furlough must be in writing, or confirmed in writing, prior to the beginning of the flexible furlough period and must state that:
  • The employee will not carry out any work in relation to their employment; or
  • The employee will not carry out the full amount of their usual hours in relation to their employment.
• The agreement must be kept until 30 June 2025.
• The new Direction confirms that the 10 June 2020 cut-off will not apply to those returning from family leave or to armed forces reservists.
  • The exception for family leave will apply to employees who have been on adoption leave, maternity/paternity leave, parental bereavement leave or shared parental leave. The employee must have taken the period of family leave on or before 10 June 2020 and it must have ended after 10 June 2020.
  • The exception for armed forces leave will apply to employees who have been called out or recalled for service in accordance with the Reserve Forces Act 1996. The employee must have been called out on or before the 10 June 2020, with their return being after 10 June 2020.
• The Treasury Direction has been amended to state that “integral to the purpose” of the furlough scheme is that payments are to be used by employers to “continue the employment of employees” for whom claims have been made. It is unclear whether the implication of this is that employers will be unable to claim the grant for employees who are under notice.
  • This position appears to contradict the HMRC employee guidance which still states that “your employer can still make you redundant while you’re on furlough”.

View the new Treasury Direction here.

Aspire Comment

The flexible furlough calculation may create a huge administration headache for many businesses, big and small, and especially for those who are already fighting the battle to keep their businesses afloat. Government guidance sets out how employers should calculate the flexible furlough claim figure.

We know that HMRC’s Fraud Investigation Services department will be carrying out mass investigations of employer’s CJRS claims. We expect that this will involve extensive viewing of business records, emails, telephone logs and records of claim calculations, but an additional consideration now must be given as to whether businesses will pay the price for making staff redundant after placing them on furlough, and therefore failing to retain their job and defeat the objective of the CJRS.

We are offering a fixed price COVID-19 Health-Check aimed at guiding you through the process and replicating HMRC’s likely approach to a post-COVID-19 investigation.  We will detail recommendations for remedial action which may be taken to reduce potential risks where necessary.

If you would like to arrange a Health-check, have any furlough queries or are considering making redundancies, please do not hesitate to give us a call on 0121 445 6178 or email enquire@aspirepartnership.co.uk.