As expected, further guidance was published on 12 June on the newest development in the successful Coronavirus Job Retention Scheme – flexible furloughing.
Until now, furloughed workers have been unable to carry out any work for their employers whatsoever. However, from 1 July, employees can move to a flexible furloughing arrangement in which they can work under any part-time arrangement, being paid their normal wage for working hours, whilst employers can still apply for the furlough grant for the remainder of their usual working hours.
This change is largely welcomed by employers, but the downside is the horribly complex calculations attached to the flexible scheme, which may put some employers off utilising it.
We will attempt to set out the salient points of the new scheme, with links to the relevant guidance.
The furlough scheme closes to new entrants from 1st July 2020 (with the exception of parents returning from statutory family leave), so if an employee hasn’t already been furloughed, it is now too late to claim for them under the scheme.
In addition, the number of employees you can claim for in any claim period starting from 1 July 2020, cannot exceed the maximum number of employees you claimed for under any claim ending by 30 June 2020.
Finally, claims must be for a minimum period of one week and can no longer overlap different months.
From 1st July , employers may agree with previously furloughed employees that they will return to work on any shift pattern and for any amount of time. There will no longer be a three week minimum period for furlough and their working pattern can change from week to week. To be eligible for the grant, employers must agree any new flexible furloughing arrangement with their employee in writing.
Of course, flexible furloughing is an option, not compulsory, so if you have no work for your employees, you can keep them fully furloughed. Alternatively, you may wish to put in place a rotational shift pattern (now not restricted to minimum three week periods), which could help to avoid some of the more complex calculations set out below.
Employers will be responsible for paying employees full pay for all hours actually worked under flexible furloughing, including Employer National Insurance and Pension Contributions. The grant will then be available to fund the hours employees are not working, calculated by reference to their usual working hours in a claim period. Both the grant and the cap (as in place at the time of the claim) will be reduced proportionately to the hours worked. For example, in July, where an employee remains furloughed for 40% of his usual hours, the employer would be able to claim the grant for up to 40% of the £2,500 cap.
If your employee is flexibly furloughed, you’ll need to work out your employee’s usual hours and record the actual hours they work as well as their furloughed hours for each claim period.
There are different calculations you can use to work out your employee’s usual hours, depending on whether they work fixed or variable hours.
Fixed hours:
Variable hours:
The “usual hours” in this case will be calculated based on the higher of either:
You need to calculate the usual hours for each pay period, or part of a pay period, that falls within the claim period.
To calculate based on average hours:
To calculate based on corresponding calendar period in the tax year 2019/20:
Employers will need to carry out both of these calculations and use the higher figure for the employee’s usual hours.
Some of these calculations can appear horribly complex, and the inclusion of non working days in the calculation can at first appear alien. It would go beyond this note to set out the exact method of calculation for each different type of worker or claim, with each possible working pattern, so we would suggest that employers consider the worked examples set out in this guidance note for more assistance.
Once you understand the “usual hours” for each employee, you will need to ensure that you record hours worked under flexible furlough in order to be able to calculate what hours you will be required to pay full pay for, and the remaining furloughed hours that can be claimed for under the grant (subject to the cap, and contribution level in place at that time).
Many employers have agreed a reduced level of pay for those employees who are not furloughed, to assist with financial difficulties. We have not seen anything in the guidance to say that employers could not agree a reduced rate for employees returning to work part time, so long as this was agreed as a contractual variation, in the usual way. However, for the purposes of making claims under the grant, the pre-furlough pay should be used.
Whilst the above provides a summary of how flexible furlough will work, it is important that employers carefully review the relevant guidance before claiming. Unfortunately, the changes have been incorporated into the existing five guidance notes, plus introducing a further three guidance notes. The links to the relevant guidance notes, and what they are used for are as follows:
For more information on the article above please contact Su Apps.
