Flexible Furlough – the latest changes

The government issued new guidance for the job retention scheme on 12th June.  It is a lengthy read, therefore we have put together a handy set of FAQs around the changes to the scheme that we hope will be helpful. The full government guidance can be accessed here.

What is flexible furlough?

From 1 July 2020, employers can agree with their employees for them to return to work for any amount of time and on any work pattern.

Employers will pay employees for the hours that they work and will still be able to claim the furlough grant to cover the difference between the hours that employees work on the flexible furlough scheme and those they would ‘normally’ have worked.

What process do I need to follow to put an employee on flexible furlough?

You will only be able to claim furlough grants from 1 July for those employees that you have previously placed on furlough for at least 3 consecutive weeks between 1 March and 30 June 2020 (there are some exceptions for employees who have been on family leave during this period).

Speak to your employees and agree the working pattern that they will undertake when they return to work under the flexible furlough scheme.  Confirm the agreement in writing and ensure you keep a copy of the written agreement on file.

Flexible furlough agreements must be made in line with existing employment law, equality and discrimination legislation; therefore, employers must be mindful of how flexible furlough agreements will impact the individual and family circumstances of their employees.

For each claim period, you must keep records of how many hours your employees work and how many hours they are furloughed.

Can I continue to fully furlough my employees if there is not enough work for them to return flexibly?

Yes, you may continue to fully furlough your employees subject to them having been furloughed for 3 consecutive weeks between 1 March and 30 June 2020.

How long can a period of flexible furlough last?

From 1 July 2020, flexible furlough agreements can last for any amount of time subject to a minimum period of 7 calendar days (and subject to the employee having been previously furloughed for a minimum period of 3 weeks before flexible furlough starts), unless you are claiming for the first or last few days of a calendar month as claims will not be permitted to cross a calendar month.

You will be permitted to enter into flexible furlough agreements more than once in order to respond to changing business demands.

Can an employee work for me during the hours that they are furloughed?

No – your employee can only work for you during the hours that you have agreed they are working.  For the hours that you claim furlough, your employee is not permitted to work for you.

How much will I be able to claim in furlough grants?

In July 2020 you will be able to claim 80% of your wage costs (capped at £2500 per month), plus employer’s NI and pension auto-enrolment contributions for the hours that an employee is furloughed.

From August 2020 you will be able to claim 80% of your wage costs (capped at £2500 per month) but employers will pay employer’s NI and pension auto-enrolment contributions.

From September 2020 you will be able to claim 70% of your wage costs (capped at £2,187.50 per month).  Employers will pay employer’s NI and pension auto-enrolment contributions and top up employee’s wages so that they continue to receive 80% of their wages whilst on furlough leave.

From October 2020 you will be able to claim 60% of your wage costs (capped at £1875 per month).  Employers will pay employer’s NI and pension auto-enrolment contributions and top up employee’s wages so that they continue to receive 80% of their wages whilst on furlough leave.

Employers remain able to top up employee’s wages above the level of 80% and the wage caps if they choose.  Wage caps are pro-rata to the number of hours your employee is furloughed, so using the example from the government guidance; if an employee is placed on furlough for 60% of their usual hours, they are entitled to 60% of the wage cap.

The furlough scheme is due to close on 31 October 2020.

How do I work out ‘normal working hours’?

If your employee is flexibly furloughed, you will need to work out their normal working hours and then record the actual hours they work and their furloughed hours for each claim period.

If an employee’s working hours are fixed, start with the number of hours they were contracted for at the end of the last pay period ending on or before 19 March 2020.

If your employee works variable hours, start with the higher of either the average number of hours worked in the tax year 2019/20 or the corresponding calendar period in the tax year 2019/20.

You then need to calculate their normal working hours using the calculations for either fixed or variable hours set out by HMRC.  The calculations are quite complex and therefore the HMRC portal has a calculator to follow, along with a number of worked examples that you can refer to here depending on each specific employment situation.

Can an employee take holiday whilst on furlough?

Yes, although holiday should be paid at 100% of pay.

We hope that these FAQs have been useful.  Naturally they are not intended to be definitive and as government updates and changes are happening frequently, these FAQs are based on our understanding of the scheme as at 13th June.  If you need any advice or support in using the flexible furlough scheme please feel free to get in touch via hello@mosaicpeople.co.uk