What you need to know about Flexible Furlough

Authored by DAS Law Senior Associate Solicitor Hayley Marles

The current situation for businesses large and small is unprecedented. We are all grappling on many levels with Covid-19 and the impact it has had and continues to have on our workforces.

Of course the government announced a package of support for businesses on 20 March and the package together with its guidance has been updated some seven times since. The Coronavirus Job Retention Scheme (CJRS) was born and in the first week of the claims portal opening, the value of claims was in excess of £1.5 billion.

But now it’s all change and employers are left trying to understand how the recently ‘flexible’ CJRS can be used as we come out of lockdown and more businesses reopen and bring back their workforces.

A quick recap

Just as a recap. The current CJRS allows employees to be furloughed and employers can claim 80% of their pay up to £2,500. Employers can then top up the remaining 20% if they choose or enter into agreement with employees to amend their terms and conditions. Employees cannot work whilst furloughed and a furlough period is a minimum of 3 weeks.

What is going to change?

If you wanted to place employees on furlough then you needed to have done it before 10 June 2020. This was the last date for furloughing employees under the original scheme, meaning they could be furloughed for the full three weeks before the scheme changes.

Over the next few months, the government plans to ease the financial burden for businesses bringing employees back by taking away the CJRS gradually.

July 2020

From 1 July 2020, we will have a ‘flexible furlough’. This change is designed to allow employees to be brought back from furlough on a part time basis. In practice, it means employees can work part time but still be on furlough for the remainder of their contracted hours.

Whilst it might be daunting and a bit of a logistical nightmare to organised, this is a really positive move for businesses that need workers for a percentage of the time but struggling with the requirement that during furlough, employees cannot work. Remember that difficulty we had around Directors being furloughed but not able to carry out any work other than statutory duties? Well that goes away now as those key individuals can be brought back to work but a saving still made whilst they are furloughed for a proportion of the time.

This change will assist those employees that are struggling with being isolated at home and perhaps those that can manage childcare now that some children will be returning to school. Importantly, employers need to ensure that when selecting those that are returning on a part time basis, this is considering objectively and without any discrimination.

August 2020

From 1 August, employers cannot claim national insurance and pension contributions back from the Government via the Scheme.

September 2020

Instead of reimbursing 80% of your workers’ pay up to £2,500, this will change from 1 September. You will be reimbursed 70% of salary for your employees but importantly, the maximum is reduced to £2,190. Employers are required to provide a top-up to the pay to 80%, if this is agreed with the employee.

October 2020

The reimbursement will decrease again from 1 October to 60%. The scheme will pay the maximum will stay the same (£2,190). Again, employers are to top this up to 80%, if this has been agreed with the employee previously.

After eight months, the furlough scheme will close on 31 October and employees will be released from furlough if they have not been already and employers will have to be ready to take them back to work at the agreed contractual capacity unless consultation has taken place with workers to amend working hours.