Flexible furlough – what are the changes from 1 July 2020?
The updated guidance issued by the Government on 12 June 2020 confirms that the last date on which employers could furlough employees was 10 June 2020, save for those returning from maternity, shared parental leave, paternity or parental bereavement leave. Click here for our previous briefing.
The government announced that from 1 July 2020, employers will be able to implement flexible furlough and that the current minimum furlough period (3 weeks) will no longer apply. However, from 1 July 2020 the minimum period that a claim can span is seven days.
Under the flexible furlough arrangement, employers can bring furloughed employees back for any amount of time and any work pattern, while still being able to claim for the hours not worked.
Employers must agree with the employee any new flexible furlough working arrangements and confirm that agreement in writing. The government guidance states that the employer needs to “keep a new written agreement that confirms the new furlough arrangement”. The written record of the agreement must be kept for five years.
Records of all claims and calculations must be kept for at least six years and should include:
- amounts claimed and the claim periods for each employee
- claim reference number
- calculations used when preparing the claims
- usual hours worked by flexibly furloughed employees (including the calculations used to reach those figures)
- actual hours worked by flexibly furloughed employees.
Employers will be required to pay employees for the days/hours worked under the flexible furlough scheme, including tax and National Insurance Contributions. Employers will be able to claim the shortfall between the hours worked and the normal hours up to the current 80% limit. See below for the upcoming changes.
The government has prepared a number of examples to assist with the calculation.
Tapered furlough and flexible furlough
From 1 August 2020, employers will be required to make a contribution to the government grant. The government will cover 80% of wages up to the £2,500 per month cap but employers will have to pay the associated employer NICs and pension contributions on wages themselves. For flexible furlough, the government grant will be prorated to reflect the proportion of hours the employee is on furlough as against their usual hours.
For September 2020, the Government will cover 70% of wages up to a cap of £2,187.50 per month. Employers will have to pay the additional 10% of wages to make up a total of 80% up to the cap of £2,500 (plus employer NICs and pension contributions). For flexible furlough, the government grant will be prorated to reflect the proportion of hours the employee is on furlough compared to their usual hours.
For October 2020, the Government will cover 60% of wages up to a cap of £1,875 per month. Employers will have to pay the additional 20% of wages to make up a total of 80% up to the cap of £2,500 per month (plus employer NICs and pension contributions). For flexible furlough, the government grant will be prorated to reflect the proportion of hours the employee is on furlough compared to their usual hours.
If you have any questions then please contact Sejal Raja on Sejal.Raja@rlb-law.com.