In our recent article “A month-by-month guide to the wind down of the Furlough Scheme” we summarised the key changes which will take effect over the next 4 months as the government’s Coronavirus Job Retention Scheme draws to a close. This includes, from 1st July, the option for employers to bring furloughed staff back to work on a part-time basis.
The government has now published further guidance on how flexible furloughing (the combination of part-time work and part-time furlough) will operate in practice and, in order to help employers to navigate the complex guidance and prepare for the part-time return of any furloughed staff from 1st July, we have provided an overview of key points below.
What happens on 1st July 2020?
This is the date on which businesses are able to bring furloughed staff back to work on a part-time basis, while continuing to claim grant funds for the hours that they do not work. The cap on the furlough grant will be proportional to the hours not worked.
It is important to note here that flexible furloughing is not compulsory and, for any employers who do not intend to bring staff back at this time, the furlough scheme will continue to run as normal until 1st August, at which point the employer financial contributions will begin.
Will all furloughed staff be eligible for flexible furloughing?
Yes, provided that they have been previously furloughed for at least three consecutive weeks before 30th June 2020.
There is an exception to this rule for employees who have just returned from maternity or other family leave but, for everyone else, they must have commenced furlough leave by no later than 10th June 2020 to be eligible to commence flexible furlough on 1st July 2020.
If a previously furloughed employee started a new three-week furlough period after 10th June (for example, because they have been on a rotating furlough arrangement) the flexible furlough cannot begin until those weeks have lapsed.
Are there any rules or restrictions on working patterns?
No – any flexible working pattern is allowed under the scheme, provided that it is agreed between employer and employee, and this can last for as long or as short as required.
The rules regarding what an employee can and can’t do during any “days off” (on furlough) remain unchanged.
Do I need to keep a record of hours worked?
Yes – Where flexible furloughing is being used, there is a requirement for employers to keep (for 6 years) a record of the usual hours worked by each employee (including details of the calculation used to ascertain usual hours) and the actual hours worked.
How will the furlough grant be calculated if flexible furloughing is used?
The government has provided a number of examples on it’s website and has also updated it’s calculator, which will no doubt go some way towards assisting with the calculations needed here. But there is no denying that this is a very complex task, which is compounded by the need to ensure that claims are contained within the same month, plus the government’s advice that an employer should not claim until it is sure of the exact number of hours an employee will have worked during the claim period.
The precise calculations required will vary depending on whether the employer has previously calculated the grant on the basis of a fixed salary or variable pay (depending on the hours worked) but in all cases, the employer must calculate the “baseline” number of “usual hours” and then compare these against the actual number of hours worked.
What constitutes “usual hours”?
According to the government’s scheme, the usual hours of employees who work variable hours should be calculated by using the wages from the corresponding calendar period last year or the employee’s average wage for the 2019-20 tax year – whichever is higher.
For employees on a fixed salary, their usual pay is that of their last pay period before 19th March 2020.
Many employers will already be giving considerable thought to how their businesses will be affected by the government’s latest easing of restrictions and, in turn, what their staffing requirements might be from 1st July. For further advice on the practicalities of implementing flexible furloughing within your business, or to discuss what steps you should be taking in relation to any employees which you intend to keep on full furlough, please contact Jonathan Moreland by email at email@example.com or by telephone on 0191 384 2441.