Flexible Furlough – FAQs

The Government has now published its guidance on flexible furlough and has updated the current Coronavirus Job Retention Scheme (CJRS) setting out what changes will take effect from 1 July 2020 and any further changes thereafter.

The scheme will officially end on 31 October 2020 and is now closed to any new 1st time entrants (save for a very limited category of employees – see Q2).

These FAQs should assist in understanding how the flexible furlough scheme will work in practice but also understand the wider changes that will take effect from this date onwards. Up to and until 30 June 2020, the Government will continue to contribute 80% of furloughed employees’ wages up to the value of £2,500. It will also continue to cover employer NIC and minimum pension contribution payable on that amount.

With effect from 1 July 2020, employers will be able to implement flexible working arrangements (should they wish to) and will need to discuss and agree any such arrangements with employees. Employers will need to pay in full for the hours worked (and will not be able to claim anything back for those hours) but the Government will continue to cover 80% of wages for the hours not worked (and the employer NIC and minimum pension contributions on that amount), albeit with the £2,500 cap pro-rated to reflect the proportion of hours the employee is on “furlough hours” against their “usual hours”.

From 1 August 2020, the amount that can be reclaimed from the CJRS will start to reduce – see Q10.

  1. What is flexible furlough?

From 1 July, employers will be able to bring furloughed employees back to work on a part time basis, and will still be able to claim under the CJRS in relation to the hours the employee has not worked.

It is important to note that employers will still be able to fully furlough employees if it is not feasible or appropriate to bring them back on a part time basis. Further, it will still be possible to rotate employees on and off of furlough leave (provided all rotating employees have already been furloughed), although this may make the calculations complex for employers.

  1. Who is eligible for flexible furlough?

In order to be eligible for furlough leave from 1 July, an employee must have previously been furloughed for at least three consecutive weeks between 1 March and 30 June, and the employer must have successfully claimed a grant in respect of that employee.

It is therefore now not possible to furlough staff who have never been furloughed before. However there is an exception for employees returning from maternity, adoption, paternity or parental bereavement leave after 10 June 2020 who can be furloughed even if they have not been furloughed before, provided that their employer has furloughed at least one employee for at least three weeks between 1 March and 30 June. From 1 July there will now also be a cap on the number of staff who can be furloughed by an employer at one time.  Excluding any first time furloughers under the ‘returning from family leave’ exception described above, an employer will not be able to claim for more staff in a single claim than it claimed for in its highest claim submitted up to the end of June.

  1. How long must employees remain on furlough for?

From 1 July, there is no minimum period that an employee must be furloughed for in order to be eligible. However, it is worth noting that the minimum claim period that employers can make a claim for is seven days, and therefore it is likely that employers will take the view there is no point in placing employees on flexible furlough for less than seven days, as they will be unable to make a claim in respect of that employee.

  1. How do you implement the flexible furlough scheme in practice?

The guidance states that a written agreement confirming the new furlough arrangement is needed.

This should be formalised by way of contractual variation, not least because those who are currently on furlough will be covered by an agreement that they must not do any work for their employer and therefore that needs to be amended.  Given previous discrepancies between the gov.uk guidance and the instruction from the Treasury department to HMRC about how to operate the CJRS, it would be prudent to have something in writing from the employee where they are proactively confirming their agreement (an email would suffice) rather than issue written confirmation of a verbal agreement.

  1. What can employers claim in respect of employees on flexible furlough?

The rules for calculating the CJRS grant in respect for employees on flexible furlough leave are complex. Employers will have to cover all the employment costs for any hours that employees work whilst flexibly furloughed and will not be able to claim any reimbursement through the CJRS. However employers will be able to make a claim in respect of any hours the employee has not worked. This calculation will be based on an employee’s normal hours, less the hours they have worked and the cap is affected too – for example if someone works 50% of their usual hours then the cap is reduced by 50% also.

Employers should be aware that significant changes have been made to the way the claim periods are calculated. From 1 July, employers will not be able to submit claims that cross calendar months and all claims for periods up to 30 June must be submitted by 31 July.

  1. If an employee is returning to work using the flexible furlough scheme, who chooses the working pattern?

The guidance stipulates that employers will be able to bring back employees for any amount of time and on any work pattern. Employers will need to agree with their employees the days, hours and shift patterns they will be required to work and confirm that agreement in writing.

We would recommend that employers take a transparent, pragmatic, and reasonable approach when deciding what part-time arrangements could look like, taking into account the employee’s personal circumstances, not least because the employee’s agreement is required for flexible furlough.  This will also mitigate the risk of tribunal claims being issued for discrimination and/or unfair dismissal, amongst other things.

  1. Can employees who are shielding remain on furlough (flexible or otherwise) until the end of the scheme?

The general position remains that there is no legal entitlement to be placed on furlough and no positive obligation on an employer to keep an existing employee on furlough until 31 October 2020. However that being said, employers must be cautious and flexible in their approach when dealing with people that are shielding particularly as they are likely to qualify as disabled for the purposes of the Equality Act and because of obligations arising under health and safety legislation.

As businesses start to increase their level of activity and service provision there will be an increased demand in some quarters for employees to return to the actual workplace but the collective guidance is clear that shielding employees should be enabled to remain at home.  In some cases that is likely to mean that furlough should be maintained although for some employers that may be unaffordable once the Government contribution towards employment costs starts to taper.

  1. If someone was originally put on furlough because there was no work for them to do, but they now do not wish to return to work because of an underlying health condition, can they be kept on furlough?

As we understand it, the reason used to furlough an employee can be changed in light of changing personal circumstances and revised government guidance issued from time to time. It is therefore not necessary that the reason provided at the outset should remain the same throughout the period of furlough.

  1. What records must employers keep with regards to furlough arrangements?

Employers are required to keep a written record of the agreed flexible furlough working arrangement for a period of at least 5 years. But

  • The amount claimed and claim period for each employee;
  • The claim reference number associated with each claim;
  • Breakdown of calculations (in the event HMRC raises a query);
  • Details of usual hours worked, including any calculations that were required, for employees that were flexibly furloughed; and;
  • Details of actual hours worked for employees that were flexibly furloughed must be retained for 6 years.
  1. How will the Government’s contribution to employment costs change?

From 1 August 2020, the Government will continue to contribute 80% of employees’ wages for hours not worked up to the cap of £2,500 (pro-rated) but employers will no longer be able to claim back the employer NIC and pension contributions.

In addition to no longer being able to claim for the employer NIC and pension contributions, from 1 September 2020 the Government will reduce its contribution to employees’ wages for hours not worked from 80% to 70% up to the value of £2,187.50 (pro-rated).  The employer must cover the shortfall – they will not be able to reduce pay to 70% and then claim. From 1 October 2020, the Government will further reduce its contribution to 60% of employees’ wages for hours not worked up to the value of £1,875 (pro-rated).  Again, the employer cannot simply reduce furlough pay to 60% during this period and then claim for the 60%.

Employers who have been paying more than the 80% would still be required to cover that from their own funds.

If you’d like any information or advice on how the above may affect you, then please contact a member of our Employment, Human Resources & Pensions Team or call 0207 880 4263.

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