Under ‘flexible furlough’, employees can do some work for their employer, without employers losing the right to claim furlough pay in respect of the hours not worked by the employees.
Key dates for the Flexible Furlough Scheme are as follows:
1 July 2020: The Flexible Furlough Scheme came into effect. Employers can now agree with employees any level of part-time working without the employee coming off the furlough scheme completely. Employers should pay (the contractual pay) to the employee for the hours actually worked. Pro-rata furlough pay will be payable by the government for hours in which the employee is not working (subject to existing and changing limits, see below). Flexible working can be done on a week by week basis for the purposes of the furlough claim.
1 August 2020: from this date employers will need to pay employer NIC’s and pension contributions on Furlough pay.
1 September 2020: from this date, government contributions will reduce by 10%. This means that the government will pay 70% of furloughed employee’s wages up to a maximum of £2,187.50 per month. Employers will have to make up the “lost” 10% of employee’s salary (up to £312.50) in addition to paying employer NIC’s and pension contributions. Failure to make the necessary top up could mean that employees are not validly furloughed (with potential claims from the employees and, possibly, HMRC).
1 October 2020: from this date, the employer must contribute 20% of the employee’s salary, i.e. up to £625.
31 October 2020: the furlough scheme ends.
Flexible Furlough Scheme – Key Points
- Flexible furlough is only available in respect of employees who have been furloughed previously for at least three consecutive weeks in the period between 1 March and 30 June 2020.
- There is no minimum or fixed requirements of pattern or working hours in relation to flexible furlough. And, unlike in relation to “normal” furlough which required employees to be furloughed for at least 3 weeks at a time, there is no minimum period for flexible furlough. However, claims can only be made in weekly increments.
- Employers can claim a pro-rated amount of an employee’s 80% of salary, based on the proportion of hours not worked out of normal working hours. Calculation of “normal working hours” will vary depending on whether the employee is (normally) on fixed hours/pay or variable hours/pay. For employees with fixed hours/pay, the calculation is based on the number of hours worked in the pay period before 19 March 2020 (e.g. during the month of February if the pay period is monthly). For employees with variable hours/pay, the calculation is based on the higher of (i) the average number of hours worked in the tax year 2019-2020; or (ii) the average hours worked in the corresponding calendar period in the tax year 2019-2020 (e.g. for flexible furlough work in July 2020, look at the hours worked in July 2019).
- For any hours which an employee works during flexible furlough, employers should pay wages, tax and NICs in the usual way.
- Employers should submit data on the usual hours the employee would be expected to work in the relevant period, the actual hours for which the employee worked and the number of furloughed hours in the relevant claim period.
- Employers must have a written agreement on flexible furlough arrangements with their employees. It is unlikely that a written record of a verbal agreement will be sufficient. The guidance also states that any flexible furlough agreement must be “consistent with employment, equality and discrimination laws.”
- It is likely that holiday entitlement of employees working under a flexible furlough scheme will continue to accrue in the usual way.
The new regime is complex and employers who seek to implement flexible furlough should familiarise themselves with all guidance and information on the new regime and/or take legal advice.
Helen Boddy is a partner in Boddy Matthews, solicitors specialising in Employment law – www.boddymatthews.com