Flexible Furloughing Scheme Explained

By June 8, 2020 June 12th, 2020 Insights
Flexible Furlough

The Coronavirus Job Retention Scheme (CJRS) was among the earliest measures the UK Government took to combat the coronavirus pandemic and its impact on small businesses. It was designed to help employers maintain their workforce by subsidising salaries in cases where the business couldn’t trade normally due to the virus. The scheme has been updated throughout the pandemic and the latest news involves the introduction of a flexible furloughing scheme.

Before we outline the changes to the scheme, you might want to have a look at our previous guide to the furlough scheme. In this post, you can find information on key points like:

  • Who is eligible to use the scheme?
  • What does the scheme cover?
  • How to apply?

As mentioned, the Government announced an extension to the scheme at the end of May. The changes create a flexible furloughing scheme, as well as see adjustments to how much the Government will cover.

Here is a look at what this means in action.

What are the major changes to CJRS?

The current scheme will continue to work as it is until the end of June, after which the flexible furloughing scheme will be introduced. Under the new scheme, furloughed employees are allowed to return to work part-time. The level of the grant will also be tapered slowly to reflect the fact that more people can return to work as restrictions continue to be removed.

Employers can have employees working part-time from 1 July while still receiving help with the salary payments. It also looks like the Government won’t announce any strict guidelines regarding what part-time work can look like. It seems employers have the discretion to bring employees back for any amount of time and any shift patterns – the only condition is that the employee isn’t working the same number of hours that they would normally work.

Please do note that flexible furloughing is only allowed from July onwards, with the furloughing scheme ending on 31 October. As some businesses can already open up, you cannot use the flexible furlough scheme in June with employees that work part-time. The furlough scheme in June is only available for those employees that are not working.

The other major change to the furloughing scheme in the coming months will be on the level at which the Government will subsidise the salary payments. Under the current furloughing scheme, the government can pay up to 80% of the salary, including NICs and pension contributions. These will change in the coming months in the following way:

  • July – same as now (80% of the salary up to the cap of £2,500 and NIC and pension contributions) but allowing flexible furloughing.
  • August – same as July except that employers have to pay NIC and pension contributions.
  • September – 70% of the salary up to a cap of £2,187.50 for the hours the employee does not work. Employers pay NIC, pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.
  • October – 60% of the salary up to a cap of £1,875 for the hours the employee does not work. Employers pay NIC, pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.

How will employees be paid on the flexible furloughing scheme?

Employers must pay their employees in full for any hours they work, including tax and NICs due on the salary. The scheme allows employers to then claim a grant for any normal working hours that employees do not work. Employers will need to report the hours the employee worked and the hours they would usually work during the claim period. The minimum claim period will be one week.

This means that as an employer you will pay for the hours the employee works, while the government will continue to provide a subsidy for the remaining hours, i.e. those that the employee doesn’t work (but would under normal circumstances).

Will employers require employee consent for flexible furloughing?

There has been some confusion on whether employers require written consent from their employees for furloughing. However, employers are required to have a written agreement from employees regarding new working conditions introduced by the different restrictions on the workplace. Therefore, it’s also advisable to have employees sign to agree to any new flexible furloughing scheme.

Can you furlough any employee on the flexible scheme?

One important thing to notice is that CJRS will close to new entrants on 30 June. This means that employees must have completed a full three-week furlough period before this date to be eligible for furloughing beyond or after 30 June. Any new employee must, therefore, be furloughed by 10 June. Employers should also keep in mind that overlapping claim periods won’t be permitted from 1 July.

How to find more information and help

The impact of coronavirus has been significant for many small businesses. While the Government has introduced a range of business loans and other schemes to help meet financial needs, many businesses can find it difficult to maintain current staffing levels. The flexible furloughing scheme can help but you might also require further help in mitigating the economic effect of the crisis.

Our professionals can help your business understand how the different coronavirus schemes work and what they can do specifically for your business. We at Devonshire Green can help you calculate the cost of the furloughing schemes and ensure you find the necessary cost-cutting measures. Contact us today and let’s keep your finances in check.