Flexible Furlough

Furlough Scheme Update – Important Date to note – 10th June 

The Chancellor has recently updated us with the changes to the Furlough scheme, which are detailed in full below. Included in this is a very important date to note being the 10th June. This is the date employees must be on the furlough scheme by, to qualify for the new flexible furlough scheme. They must remain on furlough until the 30th June, at least.

Flexible furlough Scheme

From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked. When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of a week.

The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June.

This means that the final date by which an employer can furlough an employee for the first time will be 10 June, in order for the current 3 week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.

Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June. Find out more information on how the Coronavirus Job Retention Scheme is changing, see here. 

Please note that if you wish to use flexible furlough from the 1st July, you will need to write to your employees to inform them of the change, and what hours you will expect them to work, and how many hours will be furloughed, prior to bringing them back.

Furlough Scheme changes 

As well as introducing flexible furlough changes, payment changes were also introduced regarding future payments,  introducing liability for some parts of the employee payments, which vary each month as follows;

June – No changes, employees still can receive 80% of salary capped at £2,500 and government will pay. But note important 10th June deadline as explained above.

July – Flexible furlough now possible from 1 July until the end of the scheme. Staff can work part time and be paid 100% for those hours. For remaining hours, they can receive furlough at the usual 80% paid in full by the government.

August – The government will pay 80% of Salary but Employers are now liable for Employers National Insurance contributions and Employers Pension Contributions on that 80%. A lot of small businesses will have available annual national Insurance allowances (£4,000 pa) so may only have a liability for Pension.

September – The government will pay 70% of Salary capped at £2,187.50 and expect employers to contribute 10% and the National Insurance and Pension Contributions.

October – The government will pay 60% of Salary capped at £1,875 and expect employers to contribute 20% and the National Insurance and Pension Contributions.

From 1 July to 31 October it is possible to flexibly furlough and employees to work part time.

Points for Employers to Consider 

  • The important 10th June deadline for flexible furlough. 
  • With flexible furlough possible from 1 July you may want to start planning on which hours you may wish staff to work and give them notice of the change. 
  • Throughout Furlough Employees accrue Holiday pay which is payable at 100% of salary level. Please see our article on things to consider in this regard here. 
  • From August onwards you will start having a liability in addition to holiday pay for employees not generating you any profit. You will need to consider Cashflows as to whether you can afford this liability.
  • If you cannot afford the liability you may need to make decisions now as to whether possible redundancies are required. We would recommend a discussion with a HR expert such as Westcountry HR  before starting a Redundancy process. 

 Please do not hesitate to contact us with any questions you may have.