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16 June 2020

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COVID 19 Update: Flexible furlough

Posted by: Russell Brown

Late on Friday evening, HMRC updated its official guidance, releasing details of the new version of the Coronavirus Job Retention Scheme  (Flexible Furlough Scheme), which is due to commence on 1 July 2020.

From 1 July, employers will be able to bring furloughed employees back to work for any amount of time on any work pattern while still being able to claim the grant for those hours not worked. This means employees will be able to work some of the week and be furloughed for the rest in proportions to be decided by the employer as a result of the minimum three week period for furlough being removed from 1 July 2020. Moving forward, there will be no minimum period (which means you can furlough for a day), although any claim through the CJRS portal must be in respect of a minimum one week period of 7 calendar days (ie employers can only put in four claims a month, not 31).

The guidance also confirms that employers will be eligible for more grants under the scheme in relation to those employees who they have successfully claimed a previous grant for as a result of having previously been furloughed for at least 3 consecutive weeks between 1 March and 30 June 2020. So, provided an employee has spent 3 consecutive weeks furloughed between 1 March and 30th June they will be eligible under the new scheme from 1st July.

It is important to note however that if an employee who has previously been furloughed for 3 consecutive weeks starts another period of furlough before 1st July, it must still be for a minimum of 3 weeks in order to be eligible for the grant. The guidance gives the example of a previously furloughed employee who starts a new furlough period on 22 June and explains that it would have to continue for at least 3 consecutive weeks ending on or after 12 July, after which the employee can then be flexibly furloughed for any period. This is because any period of furlough that starts before 1st July will fall under the original scheme rules and not those which come into effect on 1st July.

Broadly, from 1 July, employers will claim a pro rata’d amount of 80% of salary, based on the proportion of hours not worked out of normal working hours.  To calculate the normal working hours for those with fixed hours/pay, you simply take the number of hours worked in the pay period before 19 March 2020.  To calculate the normal working hours for those with variable pay, you take the higher of (a) the average number of hours worked in the tax year 2019 to 2020 or (b) the corresponding calendar period in the tax year 2019 to 2020.

The updated guidance also confirms the announcement made by HM Treasury on 9 June that the 10 June cut-off for furloughing employees for the first time will not apply to those returning from family-related leave, meaning that employees returning from maternity, adoption, paternity, shared parental or parental bereavement leave will still be eligible for the furlough scheme even if they have not previously been furloughed by 10 June, provided that the employer has used the furlough scheme for other eligible employees by that date.

Lastly, as result of the changes, employers will need to enter into updated furlough agreements with employees as the guidance states employers will need to keep a new written agreement that confirms the new furlough arrangements.

Here is a link to a useful summary of the new scheme.

As a result of these changes businesses may be starting to evaluate their future plans, which could include implementing redundancies, especially as they now know the timeline for the furlough scheme coming to an end. If you’re thinking of doing this you are still required by law to consider alternate ways of avoiding compulsory redundancies. If you would like any advice or have any questions on the changes to the furlough scheme or possible compulsory redundancies, please contact a member of our employment team.

 

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Russell is a Partner and Head of Glaisyers' Employment Team.

Russell Brown - Partner

To discuss how Glaisyers can assist you contact Russell Brown on Russell.Brown@glaisyers.com or via 0161 832 4666.

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