Coronavirus: flexible furloughing


On Friday 12 June 2020, following the Chancellor’s previous announcement, a large amount of detail was uploaded to the GOV.UK website. There are some particular complex issues to navigate, which we highlight in this update, and we encourage you to contact us with any specific questions. Perhaps the main take-home point is that this is a new scheme, and very different from the existing furlough scheme.

Outline of the new scheme

The current full details as at today are here:

From 1 July 2020, employers can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim a grant for the hours not worked under the new Flexible Furlough Scheme (FFS).

The key points:

  • From 1 July 2020, only those employees that have been furloughed for at least 3 consecutive weeks between 1 March and 30 June 2020 will be eligible for the FFS. The 10th June was the last date for an employer to furlough an employee for the first time, unless an employee is coming back from maternity or paternity leave.
  • You can continue to fully furlough employees until 31 October 2020 but any employees fully furloughed still cannot undertake any work for you during the time that you record them as being on furlough leave.
  • There are no minimum or maximum hours that a returning employee needs to do it is entirely up to what the business needs.
  • The most significant change is that the minimum 3-week period of furlough has been removed (as of 1 July 2020). This means that, from 1 July, agreed FFS arrangements can last any amount of time. But it is important to note that an employee, who starts a new furlough period before 1 July (e.g. has never been furloughed or is currently back working after having been furloughed) must still complete 3 consecutive weeks before being eligible for the new FFS. Therefore, an employee starting a new furlough period on the 22 June would need to remain furloughed for 3 consecutive weeks meaning this would end on 12 July 2020. It is only after this, that the employee can be flexibly furloughed for any period.
  • You will need to speak to your employees and confirm the hours of work, with a new written agreement and if the hours of work change from that which you initially agree, you will need a new agreement to reflect each change. You will need to keep a copy of these agreements and all previous arrangements for a period of 5 years. If you already have a written furlough agreement with your existing furloughed employees and you move them to flexible furlough, you will need this new agreement.
  • When claiming for employees who are flexibly furloughed, it is vital that you don’t claim until you are sure of the exact hours that they will work to ensure you don’t have to pay some of the grant back to HMRC at a later date.
  • You will need to keep records of how many hours your employees work and how many hours they are furloughed. You must keep a copy of these records for 6 years, (one version of the guidance says 5 years) together with a record of the amount claimed, your claim reference number and your calculations in case HMRC need more information about your claims in the future.
  • It is expected that this grant will be heavily audited in the future and employers must ensure they have all the necessary documentation to support their claim or risk having to repay some of the grant at a later date.
  • After 1 July, claim periods must start and end within the same calendar month and must be for a minimum of 7 days. The crucial point is that you cannot make claims that cross calendar months and so claims for periods ending on or before 30 June 2020 must be made by 31 July 2020.
  • The only exception to the 7 day rule is if the period you are claiming for includes either the first or last day of the calendar month, and you have already claimed for the period ending immediately before it.
  • The first time that you can make a claim for days in July is 1 July- you cannot claim for periods in July before this point.
  • The number of employees you can claim for in any period starting from 1 July cannot exceed the maximum number of employees you previously claimed for up until the 30 June 2020. We can provide more detail and examples on this point if required.
  • Employees continue to accrue leave during furlough (whether they are on full furlough or flexible furlough) and take leave during furlough (so long as you top the grant up to full pay for any days taken as holiday). You can continue to restrict when leave can be taken if there is a business need and the correct notice period is given.

The claim itself

  • From 1 July you are effectively claiming a pro rata’d amount of 80% of the salary of any employees you have on FFS. Your claim will be for the proportion of hours not worked out of the employee’s normal working hours (i.e. their “usual” hours).
  • There are 2 ways to calculate an employee’s usual hours, and again we can run through the detail with you if required or refer you to the above link to the Government guidance.
  • You need to be careful that the claims you make are correct. HMRC will check claims and payments may be withheld or need to be paid back if the claim is found to be either fraudulent or based on incorrect information.
  • The Finance Bill is being amended to enable HMRC to pursue employers who break the CJRS rules. If HMRC suspects that an employer has broken the CJRS rules, it can impose a 100% tax rate on the payments. HMRC can prosecute employers which fail to pay tax demands.
  • Once the Finance Bill becomes law next month, any employer that received money from the CJRS will have 30 days to self-declare a mistaken application and pay the money back without penalty.
  • When the CJRS ends on 31 October, employers will be liable to cover all associated employment costs of their employees. Therefore employers must determine, whether they can afford for employees to return to their normal hours from 1 November and if not, decide if they need to reduce hours or consider redundancy. Employers don’t have to wait until the end of the CJRS on the 31 October to make these decisions and can of course reduce hours or make redundancies at any time.

For further information or advice on any of the issues raised, or for help with services like bookkeeping, cash flow management or payroll during the Coronavirus pandemic, please call us on 01225 325580, email, or contact your usual client director.

Our thanks to Sean McDonough, Partner and Head of Employment & HR team at Mogers Drewett, for his help in compiling this article.

Please note that this is only a summary of the main issues and should not be construed as advice. Every effort has been made to ensure factual accuracy at the time of publication (19 June 2020), however, the government response to the Coronavirus situation is changing 24-7, so it should not be relied upon completely.