Flexible Furlough Scheme Guidance

Flexible Furlough Scheme Guidance

Last week the Government released guidance for the new Flexible Furlough Scheme that applies from 1 July 2020.

This is the start of the “tapering arrangements” for the Coronavirus Job Retention Scheme (CJRS) which is available to employers whose operations have been affected by Covid-19.

The guidance provided by the Government has been criticized for being complicated and difficult to understand with many grey areas remaining.

We have summarised some of the key points of the guidance to enable employers to navigate the new flexible furlough rules.

Who is eligible for flexible furlough?

The furlough scheme closed to new applicants on 10 June with only those who have completed 3 weeks of furlough by 1 July being eligible.

When making a claim, the total number of furloughed employees for any claim period cannot exceed the maximum number of employees claimed for in any period up until 30 June.

The only exception is for employees returning from statutory family leave. These employees can still be furloughed after 10th June, even if you are furloughing them for the first time, as long as they were on your payroll on 19 March 2020. They also do not count towards your maximum number of employees you can make in a single claim.

What is flexible furlough?

Under the revisions to the furlough scheme, employers will be able to bring their furloughed employees back to work on a part-time basis from 1 July and still claim for unworked hours under the furlough scheme. Before, employees were only able to carry out limited activities such as training on an unpaid basis. 

It appears that the arrangements will be very flexible. You will be able to have employees work for a few hours of the day and on different days. The key point is that you must pay the employee for any hours they work at 100% of their normal hourly rate, which cannot be reclaimed through the flexible furlough scheme.

Do we have to pay employees who work under the flexible furlough scheme?

Yes, you will have to pay an employee full basic pay for the hours they work. The unworked hours can be claimed back through the furlough scheme subject to the caps on the amount that can be claimed. These caps will reduce from August to when the scheme ends in October.

Employees will still not be able to undertake work whilst on the furloughed hours.

How do the claim periods for the furlough scheme work?

Previously employees had to be furloughed for a minimum of three weeks at a time. Now there is no minimum furlough period. Instead, subject to certain exceptions, you must now claim for a minimum of 7 calendar days and claims must be submitted on a month by month basis. It will no longer be possible to submit claims for a period that crosses over months. If you submit claims partway through a month, you will need to anticipate and provide calculations for the remaining period of the month.

The first time you will be able to claim for days in July will be 1 July 2020. In addition, 31 July is the last day you can submit claims for periods ending on or before 30 June. 

How is pay calculated under the flexible furlough scheme?

The rules are quite complicated – pay shall be based on hourly rates using basic salary. To calculate how much you can claim for a flexibly furloughed employee, you must work out the employee’s usual working hours and furlough hours. We recommend that you use the calculator issued by the Government. For information on how to calculate the pay, visit the Government website.

How do we place an employee on flexible furlough?

As with the furlough scheme, unless there are already express written terms in place, flexible furlough must be agreed with the employee. You must also put in place a flexible furlough agreement in writing recording the arrangements. This is in addition to any agreement for the employee to be placed on furlough in the first place, but you can combine the agreements into a single agreement.

Employers must keep the flexible furlough agreement and the record of hours each employee has worked for a five year period just in case HMRC wants to inspect the arrangements.  

How much can we claim for under the furlough scheme from August?

The amount that can be claimed will start reducing each month from 1 August and employers will become liable to pay National Insurance and Pension contributions for furloughed employees.

The furlough scheme will change as follows:

  • From 1 August 2020 – employers will have to pay the employer NI contributions and employer pension contributions, with the CJRS continuing to pay 80% of wages up to the cap of £2,500.
  • From 1 September 2020 – the employers will have to contribute to the 80% of furlough pay. The employer will pay 10%, with the furlough scheme paying the remaining 70%, capped at £2,187.50.
  • From 1 October 2020 – employers will also have to contribute to the 80% of furlough pay. The employer will pay 20%, with the furlough scheme paying the remaining 60%, capped at £1,875.

How Blaser Mills Law can help your business

We have been and continue to advise businesses on their employment and HR strategy and planning.

For further information on the furlough scheme, or if you would like a video call with one of our employment lawyers, please contact James Simpson, Head of Employment, on 01494 478689 or at jfs@blasermills.co.uk