Making sense of the Flexible Furlough Scheme

Wednesday July 8, 2020

The Coronavirus Job Retention Scheme, also commonly referred to as the Furlough Scheme, has been a crucial lifeline of support for many people throughout the pandemic. The scheme has helped to protect more than nine million jobs during an enforced period of lockdown, by allowing employers to furlough eligible employees and claim up to 80% of their wages.

Until recently, the scheme lacked flexibility for those businesses needing some staff to continue working on reduced hours. The initial “all or nothing” furlough arrangement meant that it was not possible to furlough employees for only some of their hours. We saw the impact of this firsthand through conversations with our clients, and so actively campaigned for the scheme to be made more flexible.

This was addressed in a No.10 daily briefing back in May, when Chancellor Rishi Sunak revealed a timeline of major revisions for the scheme. The good news was the introduction of flexible furlough. The not so good news was that employers would be asked to start making contributions.

Almost two months since the news broke, some changes have already taken effect. We are now in what is referred to as phase 2 of the Coronavirus Job Retention Scheme, which permits part-time furlough for eligible employees.

So, what exactly does flexible furlough entail? Who is eligible, and has the claiming process changed?

As you might have guessed there are quite a few new rules and calculations involved. The UK government has provided detailed guidance on how to use the scheme, but applying this to your own unique staffing situation takes time and can raise many questions.

Whilst we have highlighted some important points of phase 2 below, a conversation is best to make sense of the flexible furlough scheme for your business. It might be a good idea to have your accountant and your local HR Dept on speed dial, just to be on the safe side.

Flexible furlough rundown

What is flexible furlough?

Flexible or part-time furlough occurs when an eligible employee is furloughed for some of their hours but works the remainder of their hours. You can bring furloughed employees back to work part-time for any number of hours and any working pattern if the employee agrees.

This new agreement should be kept in writing for a minimum of six years.

Who is eligible for flexible furlough?

Only those employees who had already been furloughed prior to 1st July for a three-week period can be brought back to work part-time through flexible furlough. There is an exception for employees returning from statutory parental leave who had not previously been furloughed. They can be placed on flexible furlough if you had previously registered with the scheme.

There are further exceptions regarding TUPE and military reservists returning from mobilisation.

Has the claiming process changed?

The claiming process is done through the same government portal. The main differences lie within the calculations required for employees on part-time furlough.

Additionally, it’s important to note that you cannot claim for a number of employees that exceeds the maximum number of employees in a previous claim. So for example, if the most employees you had claimed for was 50, you cannot claim for more than 50. This rule does not apply to the exceptions mentioned above.

Minimum furlough periods have changed too. The minimum claim period is now seven days, with some exceptions.

Calculations for flexible furlough

The government has provided specific guidance and an online calculator to help you with calculations for furloughed employees. For flexible furlough, you will need to claim for hours not worked and pay hours worked. It sounds simple but it’s not.

We recommend that you read the guidance in full prior to making a claim. In short, you will need to take the following steps in order to calculate how much you can claim: Decide on the length of the claim period, work out the employee’s usual hours and furloughed hours, and work out what to include when calculating wages.

From August, you will need to pay employee national insurance and pension contributions. The level of employer contributions continues to rise from September.

Flexible benefits

The Flexible Furlough Scheme can be beneficial for people management in several ways. For starters it can help with a phased return to work for furloughed employees and make the business more productive. It can also help with the management of social distancing rules in your business by having staff work alternating shifts.

If you are an eligible employer who would like to take advantage of flexible furlough, but have questions about how to do so, we can help.

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