From 1 July 2020, employers have been able to implement ‘flexible furlough’ under which employees can do some work for their employer, without employers losing the right to claim furlough pay in respect of the hours not worked by the employees.
Thee new regime is complex and below is a summary of the key points. Employers who seek to implement flexible furlough should familiarise themselves with all guidance and information on the new regime.
- Flexible furlough is only available in respect of employees who have been furloughed previously for at least three consecutive weeks in the period between 1 March and 30 June 2020.
- There is no minimum or fixed requirements of pattern or working hours in relation to flexible furlough. And, unlike in relation to “normal” furlough which required employees to be furloughed for at least 3 weeks at a time, there is no minimum period for flexible furlough. However, claims can only be made in weekly increments.
- Employers can claim a pro-rated amount of an employee’s 80% of salary, based on the proportion of hours not worked out of normal working hours. Calculation of “normal working hours” will vary depending on whether the employee is (normally) on fixed hours/pay or variable hours/pay. For employees with fixed hours/pay, the calculation is based on the number of hours worked in the pay period before 19 March 2020 (e.g. during the month of February if the pay period is monthly). For employees with variable hours/pay, the calculation is based on the higher of (i) the average number of hours worked in the tax year 2019-2020; or (ii) the average hours worked in the corresponding calendar period in the tax year 2019-2020 (e.g. for flexible furlough work in July 2020, look at the hours worked in July 2019).
- For any hours which an employee works during flexible furlough, employers will need to pay wages, tax and NICs in the usual way.
- Employers should submit data on the usual hours the employee would be expected to work in the relevant period, the actual hours for which the employee worked and the number of furloughed hours in the relevant claim period.
- Employers should have a written agreement on flexible furlough arrangements with their employees. It is unlikely that a written record of a verbal agreement will be sufficient. The guidance also states that any flexible furlough agreement must be “consistent with employment, equality and discrimination laws.”
- It is likely that holiday entitlement of employees working under a flexible furlough scheme will continue to accrue in the usual way.