As you may be aware, the Government launched its flexible furlough scheme on July 1st. The scheme gives you the chance to bring staff back part-time and claim grants to cover some of their wages at the same time.
Here’s what you need to know when accessing the scheme.
Which employees can go on flexible furlough?
The only eligible employees are those you’ve successfully claimed grants for in the past.
That means your employee must have been on furlough for at least three consecutive weeks at any point between March 1st and June 30th, 2020.
How do I put an employee on flexible furlough?
This process should begin with a discussion with the employees you wish to put on flexible furlough. You must also agree the arrangements of their part-time work.
You’ll then 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. Furthermore, you can continue to fully furlough employees if you wish, provided you’ve successfully claimed a grant for them before.
How long must flexible furlough last?
Flexible furlough agreements can cover any length of time. However, the minimum period that you can claim for is seven calendar days.
As employees can enter into a flexible furlough agreement more than once, you have the option to adjust working hours as lockdown eases.
How much can I claim?
Employees must be paid 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’re placed on furlough for 60% of their usual hours.
From August, you’ll also be responsible for employees’ National Insurance and pension contributions for the furloughed hours. The amount that the scheme will cover will decrease from September 2020.
When claiming for employees who are on flexible furlough, only do so when you’re 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, you’ll 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’re on furlough.
You’ll need to record that an employee who usually works for 37 hours a week is actually working for 15 hours and furloughed for 22 hours.
How do I calculate an employee’s working hours?
To calculate the working hours for an employee on flexible furlough, you’ll need to know:
- Your employee’s usual hours.
- The actual hours they work during flexible furlough.
- The number of hours the employee spent on furlough.
How you then calculate their usual working hours will depend on their contracts.
For instance, if they work fixed times each week, you need to use the hours they were contracted for at the end of the last pay period ending on or before March 19th, 2020.
Where the employee works variable hours, you’ll have to 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.
Need our help?
If you would like further complimentary advice on furlough from an expert, our advisors are ready to take your call any time day or night. Call us on 0800 917 0771 or request a callback here.