Flexible furlough – How does it work?

The government has published its long awaited guidance on flexible furlough, as part of the wider pathway to phasing out the Scheme later this year.  Flexible furlough i.e. part working and part furlough, will be permitted from 1st July 2020.

Who can be furloughed under the new rules?

The Scheme is now closed to new entrants (save for circumstances where an employee has returned from a period of maternity or family leave), meaning that flexible furlough will be limited to those who have previously been furloughed for a minimum of three weeks as at 30th June 2020.  The employee does not need to have been on furlough as at 30th June, simply that they have previously completed a period of three weeks of furlough leave during the operation of the Scheme.

How will it work in practice?

From 1st July, employees can return to work for some days (or even part days) and be furloughed for the rest of their contractual hours.  The cap on the amount of furlough that can be claimed is proportionate to the hours that are not worked by the employee.  Employers will need to update their calculations for employees where they elect to use flexible furlough, please refer to the Guidance for the worked examples of calculations.

The Scheme does not set any form of working pattern, giving total flexibility to the employer to agree with the employee the pattern of work that they see fit.  However, the employer must enter into a new Agreement with the employee to set out the terms of their flexible furlough and the existing rules about not working for the employer at the same time as being furloughed remain unchanged.

The Guidance sets out additional record keeping required by the employer to demonstrate hours worked, furloughed and their calculation methods.  It is imperative that employers carefully follow this to ensure that they can respond to any requests for information/provide these during any later inspections from HMRC.

It is important to note that if you have furloughed an employee between the period of 10th June to the end of this month, the three week minimum period of furlough will still apply in order for you to be able to make the claim.

How do you work out the employee’s “usual” hours?

Where the employee has fixed hours, the reference hours will be their normal contractual hours at the end of the last pay period ending on or before 19 March 2020.

For an employee whose hours vary, the guidance states that the usual hours will be the higher of the average number of hours worked in the 2019/20 tax year or the hours working the corresponding period in the 2019/20 tax year.

Next Steps:

  • Review your existing furlough agreements to ascertain whether you need to extend those to continue to furlough
  • Consider whether you will want to use flexible furlough and, if so, put in place new agreements with staff to document those

Please get in touch with us for further guidance and support – employment@kitsons-solicitors.co.uk
The Employment Team  

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    Jayme NicholsonPartner and Head of Employment

    Jayme is a Partner and Head of our Employment team

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