What is Flexible Furlough?

27 July 2020

The UK government’s Job Retention Scheme will continue to change over the summer 2020 months. With lockdown measures lifting, you can expect to bring more employees back to work.

Supporting this is the flexible furlough scheme (FFS). It provides your business with a chance to return employees in a well-structured manner.

This can help with your health & safety requirements. As well as getting your business up and running closer to full functionality.

You can talk to us on 0800 028 2420 if you need immediate assistance on the changes to the Job Retention Scheme. We also have back to work advice for you to help with reopening.

And you can read our guide, which covers the essential changes you need to know.

Changes to the Job Retention Scheme—an Overview

With the UK government’s announcements, the updates start the process of winding down this business-supporting scheme.

It’s still on track to close at the end of October 2020. However, until then the flexible furlough option is available—it’s just different from the previous incarnation.

And it’ll continue to change over July, August, and September. This is primarily with phased reductions in the financial support your business will receive. These are:

1st July 2020

You can return staff to work and place them on new shift patterns or working hours.

You’ll still receive financial support for the hours/days they don’t work—you can place them back on furlough for that time.

1st August 2020

You’ll continue to receive 80% of monthly wages for employees (with a £2,500 cap).

However, from the start of this month you’ll need to pay for National Insurance and pension contributions.

1st September 2020

At this stage, the monthly contributions from the UK government will begin to drop. It becomes 70% of an employee’s monthly wage (with a cap of £2,187.50).

You’ll need to pay for the National Insurance and pension contributions, also, and you must also pay the final 10% of staff wages to bring them up to 80% of their normal monthly income to the cap of £2,500.

1st October 2020

UK government contributions decrease to 60% with a cap of £1,875.

As before, you’ll need to pay National Insurance and pension contributions. And cover staff wages to meet 80% of their monthly income (with a cap of £2,500).

The Job Retention Scheme is then set to end on 31st October 2020.

Flexible Furlough Scheme—Employer Claim Deadlines

Under the new scheme, claim deadlines start on the 1st of each new month and end at the end of the same period.

For example, new claims will begin from 1st July 2020 for that phase. And end on Friday 31st July 2020.

At this point, you’ll need to make a claim again for the next phase from August 1st 2020.

So, the duration of new furloughs is for as long as you see fit during any calendar month.

However, keep in mind there’s a minimum period of time to claim for any given employee—that’s seven calendar days.

You may also think, “Do I need written agreement from employees for the new scheme?” Yes, you’ll need to discuss with each employee this arrangement. Then confirm this in writing with them.

If you’re also wondering, “Do I need to keep the record of new furloughs?” Yes, you’ll need to keep these in your records for the next five years.

Who is Eligible to be Furloughed Under the New Flexible Furlough Scheme?

It’s available for any employees you have already placed on furlough.

So, an employee can’t claim a grant if they weren’t on furlough for at least three weeks between 1st March 2020 and 30th June 2020.

However, there are some exceptions with certain employees. For example, when staff returning from parental leave and sick to the new furlough scheme—you can make a claim for them.

That’s if you didn’t place them on furlough before. The full list of exemptions is:

  • Any reservist staff who return from active service. The service needs to be prior to 10 June 2020 and they need to have returned after this date
  • Members of staff who return from the following leave:
    • Parental bereavement.

Do note for the above, to take advantage you must have placed at least one employee on furlough since March 2020.

Are There Any Limits on the Number of People You Can Furlough?

Yes. From the 1st July 2020, the number of employees you claim flexible furlough for can’t exceed the amount you claimed under the first scheme.

However, you don’t have to include individuals returning from parental leave in that calculation.

And employees/workers on any sort of contract of employment can go onto flexible furlough. That includes:

  • Full or part-time.
  • Agency workers.
  • Zero-hour contract workers.

Calculating Pay Under the Flexible Furlough Scheme

Working out pay under the new scheme is a bit more complex than previously.

This is because you may find some employees on unusual, ever-changing hours during a working week.

You’ll need to track the hours your staff work. You can claim the furlough grant for the hours they don’t work, compared to what their normal hours are.

You have to pay your staff full wages for the hours they work. And you must also pay for contributions to:

  • National Insurance.

You can still top up your employees to their full 100% pay if you choose to—although that’s not a legal requirement.

But it does make working out total pay a bit more difficult. If you have a lot of employees, you’ll need to dedicate time to ensure staff pay is accurate.

For working out flexible furlough scheme part-time pay, work out:

  • How many days and hours each employee normally works.
  • How many days and hours they’ll work at full pay.
  • The number of days/hours they’ll be on furlough.

Here’s an example to provide you with a template calculation. An employee earns £1,500 a month and works an eight-hour day (excluding breaks)—from Monday through to Friday.

If this individual was on furlough for 80% of their wage, that’s £1,200 per month.

If you ask the employee to work two days a week throughout July, every Monday and Friday, that’s nine days at full pay. Plus, 14 days of furlough grant claims.

So you need to:

  • Work out how many hours that is and then multiply the total number of days by the hours they work in a day—in this case, eight.
  • Normally the employee works 184 hours a month. The total furlough hours is 112. And the total number of hours they’ll work is 72.
  • To work out furlough pay, you’ll have to divide the total number of furlough hours by the total hours the individual is in work. Then multiply that by their total monthly pay, before multiply that by 80%. So the calculation is:
    • 112 hours / 184 contracted hours / £1,500 normal salary x 0.8 = Total monthly wage.

After this, do the same with the number of hours they’ll work. That’ll work out their full pay. So the calculation is:

  • 72 hours / 184 contracted hours x £1,500 = Total monthly wage.

You then have to add the two totals together for the full pay for each month.

Need Our Help?

After lockdown and the continuing effects of the coronavirus pandemic on the economy, we can help to guide you through these difficult times. Call us for instant support: 0800 028 2420.

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