On 12 June 2020, the government published guidance – predominantly for employers - on the changes to the Coronavirus Job Retention Scheme (CJRS). In this article we consider the guidance and how the flexible furlough scheme will apply from 1 July 2020. 

Summary of the changes

We previously reported (LELR 674) that the CJRS closed to new entrants on 10 June 2020. This means that employees who had not been furloughed by that date will not be able to be furloughed under the flexible furlough scheme, which is due to come into effect from 1 July 2020. 

The only exception to the ‘no new entrants’ rule is where an employee is returning from statutory parental leave (maternity, paternity, adoption and shared parental leave) after 10 June. The government guidance ‘Check which employees you can put on furlough to use the CJRS’ states that those returning from statutory parental leave who have not previously been furloughed can still be furloughed for the first time, provided at least one other employee within the organisation has been furloughed for at least three consecutive weeks at any time between 1 March and 30 June 2020.

What is flexible furlough?

Until 30 June 2020, employees who are furloughed cannot do any work for their employer during the period they are on furlough (for which the minimum period is three consecutive weeks). 

From 1 July there is no longer a minimum furlough of three weeks and employers can bring furloughed employees back to work for any amount of time and on any work pattern.

However, an employer can only make one claim for any given furlough period and the minimum period of claim is (with one exception) seven calendar days. The exception within the guidance for employers ‘Steps to take before calculating your claim using the Coronavirus Job Retention Scheme’, is where the furlough period spans two months. So, where, say, four days of the claim fall in July and three days of the claim fall in August, the employer can make a claim for each month.

In practice, this means that an employer could furlough an employee for just one day a week (paying the worker their contractual pay for the hours that they actually work) so long as the employer then claims for the minimum period of seven calendar days. 

Who will flexible furlough apply to?

Only those employees who have previously been furloughed for at least three consecutive weeks anytime in the period 1 March 2020 until 30 June 2020 can be flexibly furloughed (or furloughed at all) from 1 July 2020. That wouldn’t apply, for example, to employees who had agreed to reduce their working hours over the last three months but were not actually furloughed.

A cap applies to the number of employees an employer can claim for. The guidance ‘Check which employees you can put on furlough to use the CJRS' states that the number of employees an employer can claim for cannot exceed the maximum number of employees the employer claimed for by 30 June 2020 at one time. So, for example, if the employer claimed for the wage costs of 20 employees in April, 40 in May and 30 in June, the maximum number of employees who can be flexibly furloughed from 1 July 2020 is 40. The cap does not apply to those who are returning from statutory parental leave.

Where there is a TUPE transfer after 10 June the maximum number of employees the new employer (transferee) can furlough is a total of the number of employees who were furloughed by the transferee pre-transfer, plus the number transferred to the new employer who had been furloughed (and for whom wages had been claimed) for at least three consecutive weeks by their former employer in the period 1 March to 30 June 2020.

How will flexible furlough work in practice?

There will need to be individual notification and acceptance of new flexible furloughing arrangements (and there can be more than one), or (again one or more) collective agreement(s).

Employers will need to ensure that the hours employees are flexibly furloughed for and the hours they work do not discriminate for a protected characteristic and the overall arrangements should be reviewed with recognised trade unions, or with workplace representatives where a union is not recognised.

Calculating the hours and pay

When an employee is flexibly furloughed, the employer will need to work out the employee’s usual hours:

  • For employees who have fixed hours and whose pay does not vary, the employee’s usual hours are based on the hours the employee was contracted to work at the end of the last pay period ending on or before 19 March 2020.
  • For employees who work variable hours, the usual hours are the higher of the average number of hours worked in the tax year 2019-2020, or the corresponding calendar period in the tax year 2019 (so for July 2020 the corresponding calendar year is July 2019).

 

Having determined the employee’s usual hours, the employer will need to keep a record of the actual hours the employee works to calculate the furloughed hours for each claim period. 

The government proposes to wind down payments to employers under the CJRS (see LELR 674) but for the months of July and August the employer will need to pay at least 80 per cent of the employees’ wages for the period they are furloughed in addition to the employee’s full contractual pay including overtime for the hours actually worked.

The employer is required to keep records of their calculations and there is now a process in place to assist employers who have either under-claimed or over-claimed the grant for wage costs.

Conclusion

The flexible furlough scheme provides an opportunity to enable workers to return to work. If employers are to take advantage of it, they must ensure a safe system for return to work in consultation with recognised trade unions.

To read the government guidance ‘Changes to the Coronavirus Job Retention Scheme’ in full go to: https://www.gov.uk/government/publications/changes-to-the-coronavirus-job-retention-scheme/changes-to-the-coronavirus-job-retention-scheme

To read the government guidance for employees, ‘Check if your employer can use the Coronavirus Job Retention Scheme’ in full go to: https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme

To read the government guidance ‘Check which employees you can put on furlough to use the CJRS’ in full go to: https://www.gov.uk/guidance/check-which-employees-you-can-put-on-furlough-to-use-the-coronavirus-job-retention-scheme

To read the government guidance, ‘Check if you can claim for your employees' wages through the Coronavirus Job Retention Scheme’ in full go to: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme?utm_source=7273b086-f29d-46e4-88a5-097f0bf2d886&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

To read the government guidance, ‘Claim for wages through the Coronavirus Job Retention Scheme’ in full go to: https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme?utm_source=24e697a9-a8bb-4654-9809-971bf13e2423&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

To read the government guidance, ‘Calculate how much you can claim using the Coronavirus Job Retention Scheme’ in full go to: https://www.gov.uk/guidance/calculate-how-much-you-can-claim-using-the-coronavirus-job-retention-scheme?utm_source=eb6fb9b0-8fd2-42e9-b905-adaf3ebcdb1f&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

To read the government guidance, ‘Steps to take before calculating your claim using the Coronavirus Job Retention Scheme’ in full go to: https://www.gov.uk/guidance/steps-to-take-before-calculating-your-claim-using-the-coronavirus-job-retention-scheme?utm_source=8f006c27-4f6f-453f-910d-11535f9f0838&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

To read the examples for employers, ‘Examples of how to calculate your employees' wages, National Insurance contributions and pension contributions’ in full go to: https://www.gov.uk/government/publications/find-examples-to-help-you-work-out-80-of-your-employees-wages/examples-of-how-to-work-out-80-of-your-employees-wages-national-insurance-contributions-and-pension-contributions

Articles shared by Thompsons relating to coronavirus (COVID-19) are correct at the time of publication. You should check the government's guidelines for the latest information and advice at https://www.gov.uk/coronavirus.