Job Retention Scheme – Chancellor launches ‘flexible furlough’

On 30 May, the Chancellor announced some important changes to the Coronavirus Job Retention Scheme for employers – notably the introduction of the flexible furlough scheme.

New flexible furlough scheme from 1 July

From 1 July, employers can bring furloughed workers back to work part-time

• Government will continue to pay 80% of an employee’s normal monthly gross salary unworked hours, subject to the cap
• Any working hours arrangement that you agree with your employee must cover at least one week and be confirmed to the employee in writing
• If your employees are unable to return to work, or you do not have work for them to do, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules, until August

Government contribution will decrease from 1 August

• June and July – the government will pay 80% of wages up the cap, as well as employer NICs and pension contributions for unworked hours
• August – the government will pay 80% of wages up the cap but employers will pay employer NICs  and pension contributions
• September – the government will pay 70% of wages up to a cap of £2,187.50 for unworked hours – employers will pay employer NICs , pension contributions and 10% of wages to make up 80% of the total, up to a cap of £2,500
• October – the government will pay 60% of wages up to a cap of £1,875 for for unworked hours – employers will pay employer NICs , pension contributions and 20% of wages to make up 80% of the total, up to a cap of £2,500. Thereafter the cap will be proportional to the unworked hours

Don’t forget

• Commission and bonuses cannot be included in your calculations of ‘salary’ under the Scheme. This will be a huge problem for employees where non-guaranteed performance related commission/bonus is a large component in their usual take-home pay. Regularly worked overtime should not be included in the 80% salary calculation
• Practically rather than legally, you should try to give employees as much notice as possible if you intend to use the flexible furlough arrangement in July
• You must document the new flexible furlough arrangement in writing
• Employees should also be asked to confirm that they waive any claims for the 20% balance of wages (or more) that they would otherwise have been paid
• Employers can apply the scheme to employees on zero-hour contracts
• The new scheme applies only to employees already furloughed at any stage prior to 1 July for a full 3 week period. So the last date to place an additional employee on furlough will be 10 June

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.