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Coronavirus Job Retention Scheme – Flexible Furlough

17th June, 2020 by Simon deMaid

Further to the Chancellor’s announcement on 29 May 2020, the guidance to the Coronavirus Job Retention Scheme (the “Scheme”) has been updated to reflect changes coming into effect from 1 July 2020, including new rules concerning “flexible furlough”. Subject to the amended rules, employers will be able to agree flexible arrangements with employees allowing them to return for periods of work, without compromising their ability to claim under the Scheme for other hours not worked and which are designated furloughed.

Changes from July 1 2020

A summary of the main changes include:

Employers can bring back furloughed employees for any amount of time and any shift pattern, whilst still being able to claim under the Scheme for furloughed hours until the Scheme closes on 31 October 2020. Employees should still not undertake any work or provide services for an employer during periods of designated furlough leave.
There is no minimum period of furlough (i.e. employees no longer need to be furloughed for a minimum 3 week period).
The Scheme closes to new entrants. Employees can still be furloughed after 1 July 2020, but only if they have been previously furloughed, at any point, for a 3 week period before the 30 June 2020.
Subject to TUPE and parental leave exceptions (see below), the maximum number of employees for which an employer can claim under the Scheme going forwards is limited to the maximum number of employees claimed for in any previous claim period under the Scheme.
To flexibly furlough employees, a new written furlough agreement is required. That agreement must be consistent with employment, equality and discrimination laws and be retained for 5 years. Copies of all your records relating to claims under the Scheme (including those relating to hours actually worked and usual working hours) should be retained for 6 years.
Flexible furlough agreements can last any amount of time. Employers can enter into a flexible furlough agreement more than once.
Claims for furloughed and flexibly furloughed employees are to be submitted together, as one claim.
Employers must pay their employees 100% contractual pay for hours worked and are responsible for paying tax and NIC contributions on those hours. When employees are furloughed, they are entitled to receive 80% of their salary (capped at £2,500 per month), subject to any ‘top up’ arrangement. From August 2020 this will however change (see question 3 of our article for more detail).
Any claim under the Scheme must cover a period of at least 7 calendar days and must not overlap months. Claims for less than 7 days can only be made where they include the first or last day of a month and the employer has already claimed for the period immediately preceding the short claim period.
To claim any amounts due under the Scheme before 30 June 2020, employers must complete their claims with HMRC by 31 July 2020.
Employers can continue to make claims before, during or after their payroll has been run. If a claim for an employee on flexible furlough is made in advance and the employee works more hours than stated, you have to repay the grant relating to the additional worked hours.
Parents returning to work from paternity or maternity leave after the 10 June 2020, will be eligible under the Scheme.

Flexible Furlough Calculations

When claiming for an employee on flexible furlough, employers need to calculate their usual working hours for the relevant period and subtract from that the hours actually worked during that period, giving the hours for which the employee is furloughed. Records of these calculations need to be kept for 6 years. An updated calculator is available for the Scheme.

Detailed guidance with worked examples has been produced to assist employers to work out employees’ usual working hours. Different calculations are required if an employee works fixed or variable hours. The guidance also covers how to calculate 80% of employee’s normal wages (using the last full pay period before 19 March 2020).

Simon DeMaid comments:

“The changes made to the Furlough Scheme provide greater flexibility which will undoubtedly assist employers emerging from lockdown and through the turbulent times the economy is likely to face. Employers should review their workforce requirements and consider which furloughed workers can return to work. Before those workers return to work employers should consider any health and safety implication and undertake necessary risk assessments.

From August 2020, the financial support under the Scheme will reduce and the Scheme will end on 31 October 2020. Employers therefore need to consider the implications of that, including whether workforce restructuring is necessary.

Our Q&A article answers many commonly asked questions in relation to the Scheme, in particular the reduction of the level of grant from August 2020. Should you wish to discuss this further please contact a member of the team here.”

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