On Friday evening, the government announced further details on the Flexible Furlough Scheme and how this will operate from 1 July onwards.
As confirmed in our previous bulletin, it is now no longer possible to add new entrants to the furlough scheme (other than those returning from maternity or other family leave). Only employees who have been furloughed for at least three weeks on or before 30 June under the old scheme can be furloughed after 1 July.
How does Flexible Furloughing work?
From 1 July, employees will be no longer be restricted from carrying out work for their employer but can instead carry out work for some of the week and be furloughed for the rest. The proportion of this working/furlough split is to be decided between the employer and employee.
The cap on the furlough part of the week will be proportional to the number of hours not worked, based upon normal working hours. Normal working hours for fixed hours/pay employees are based on the pay period before 19 March 2020, whereas for employees with variable pay normal hours will be the higher of i) the average number of hours tax year 2019 to 2020, or ii) the corresponding calendar period in the tax year 2019 to 2020.
From 1 July, the minimum three-week furlough period no longer applies. Any claim for the period before 30 June must be made before 31 July 2020. After this period, any claim must start and end within the same calendar month (due to the scheme changing from month to month from July onwards).
More than one claim can be made within a month, but each claim must be for a period of at least 7 days (so a maximum of 4 claims per month). If a claim spans two months (such as a weekly paid employee being paid the last few days of one month and the first few of the next), then two claims will need to be made.
These changes have been introduced by updating much of the previous guidance that had been issued and introducing three new pieces of guidance. All in all, this makes the new scheme administratively challenging for employers, at a time when much of their attention is focused elsewhere.
By way of example, here is one of HMRC’s worked examples of how to calculate furlough pay for a flexibly furloughed employee…..and this is for a straight forward scenario with an employee on fixed hours and fixed salary.
If you are going to be using the new flexible furlough scheme, the guidance states that you will need to put in place a new agreement detailing the arrangements and there are also new strict record keeping requirements under this scheme.
Can employers avoid having to make the flexible furlough calculations?
With the removal of the 3-week minimum furlough period, employers may wish to explore whether there are any alternative arrangements that could be used instead such as rotating furloughed employees on a more frequent basis (such as weekly) to avoid the need to use the burdensome flexible furlough calculations.
With the furlough scheme requiring further employer contributions and becoming a greater administrative burden to manage as we move forwards, we anticipate that many employers will be looking at other options such as redundancies and other changes their workforce instead.
Bulletin 4 of our newsletter covering this topic will follow later this week.
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