NEW rules on flexible furlough explained

James Potts - Associate Director of Legal

June 23 2020

The government’s new flexible furlough scheme launches on the 1 of July, giving you the chance to bring staff back part-time and still claim grants to cover some of their wages.

Here’s what you need to know to access the scheme.

Who can go on flexible furlough?

Only employees that you’ve successfully claimed previous grants for are eligible for the scheme.

This means your employee must have been on furlough for at least three consecutive weeks at any time between 1 March and 30 June 2020.

How do I put someone on flexible furlough?

First have a discussion with the employees who you wish to place on flexible furlough and agree the arrangements of their part-time work.

Then you’ll need to confirm your new agreement in writing and keep a written record for five years.

You don’t need to place all your employees on flexible furlough, and you can continue to fully furlough employees if you wish provided you have successfully claimed a grant for them previously.

How long must flexible furlough last?

Flexible furlough agreements can cover any amount of time, but the minimum period that you can claim for is seven calendar days.

Employees can enter into a flexible furlough agreement more than once, so you have the option to change working hours as lockdown eases.

How much can I claim?

You’ll need to pay your employee in full for the hours they work, plus National Insurance contributions and pension contributions for those hours.

The scheme will allow you to recover the remainder of wages to a maximum cap. Wage caps are proportional to the hours an employee is furloughed each month.

For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours.

From August, you will also be responsible for employees’ National Insurance and pension contributions for the furloughed hours. The amount that the scheme will cover will then start to drop from September 2020.

When claiming for employees who are on flexible furlough, you should not claim until you are sure of the exact hours they will have worked during the claim period.

If you claim in advance and your employee works for more hours than you have told HMRC about, then you will have to pay back some of the grant.

What records should I keep?

You’ll need to keep records of how many hours your employees work and the number of hours they are on furlough.

For example, you will need to record that an employee who normally works for 37 hours a week is actually working for 15 hours and is furloughed for 22 hours.

How do I calculate working hours?

To calculate the working hours for someone on flexible furlough, you’ll need to know:

  • Your employee’s usual hours. 
  • The actual hours they work during flexible furlough.
  • And the number of hours spent on furlough.

How you calculate your employees’ usual working hours will depend on their contracts.

If they work fixed times each week, then you need to use the hours your employee was contracted for at the end of the last pay period ending on or before 19 March 2020.

Where an employee works variable hours, you will use the higher of:

  • The average number of hours worked in the tax year 2019 to 2020.
  • The average hours worked in the corresponding calendar period in the tax year 2019 to 2020.

Get expert furlough advice

While it’s great that you can access funding as you get back to work, the new rules do make furlough more complicated.

So, for expert advice on how to set up a new flexible furlough agreement with staff, contact your Peninsula HR advice line.

BrightHR users can also use the furlough navigator, an online tool that lets you track and record staff’s hours in one place online.

Simply login to your BrightHR account to start using the furlough navigator today or click here to find out more.

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