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How Will the Flexible Furlough Scheme Work?

on Wednesday, 17 June 2020.

On 12 June, the Government released detailed guidance on the new flexible furlough scheme (new Scheme), which will be introduced from 1 July 2020.

The new guidance provides clarity on the main workings of the new Scheme, and addresses some previously unanswered questions.

What Did We Already Know About the New Scheme?

We already knew that:

  • flexible furloughing would be introduced from 1 July 2020, meaning that from this date employees can work part-time whilst furloughed, something that is prohibited under the current scheme
  • from 1 August 2020, employers will be required to contribute to the cost of the new Scheme, starting with paying employee pension and National Insurance contributions in August
  • 10 June 2020 was the cut-off date for furloughing an employee for the first time, in order to allow the currently required 21 day furlough period to be completed by 30 June
  • from 1 July 2020, employers will be limited to furloughing no more than the maximum number of staff furloughed under the current Scheme

What Additional Detail Does the New Guidance Reveal?

The new guidance confirms that:

  • from 1 July 2020, the current three week minimum furlough period will be removed. There will be no minimum furlough period from July onwards, although for the purposes of claiming though the portal, employers will be limited to making one claim per week
  • flexible furlough agreements can last any amount of time and employees can be flexibly furloughed more than once. In practical terms, this means employers can continue to rotate staff between furloughed and working status, if desired
  • a previously furloughed employee can commence a new period of furlough leave between 11 and 30 June 2020 (ie after the 10 June cut-off date). As any such new period of furlough leave will commence under the current Scheme, the three week minimum furlough period will continue to apply, regardless of whether this period ends before or after 1 July. The guidance gives the example of a previously furloughed employee commencing a new period of furlough leave on 22 June. In order to satisfy the current three week requirement, they would have to remain furloughed until at least 12 July. After this point, they can be flexibly furloughed under the new Scheme
  • where an employee was on statutory family leave (such as maternity or paternity leave) on 10 June 2020, they can be furloughed for the first time after the usual cut-off date, as long as their employer had used the Scheme in respect of other staff by 10 June 2020

Coronavirus guidance employers

Calculating Pay For Part-Time Staff On Flexible Furlough

The updated guidance contains several worked calculations to show how pay should be calculated under the new Scheme, depending on the individual's particular circumstances:

  • broadly, it will be necessary to calculate the employee's usual working hours, and then work out as a proportion of these, their hours spent furloughed, and their hours spent working
  • the calculations employers will be required to carry out will differ depending on whether the employee usually works fixed or variable hours
  • staff should be paid in full for any hours they work whilst flexibly furloughed and the employer will be responsible for paying this element themselves
  • the employer will then be permitted to claim under the new Scheme for time spent furloughed
  • the usual caps will continue to apply, and from 1 August 2020 until the new Scheme closes on 31 October 2020. The Government grant will reduce as employer contributions increase. There continues to be no obligation on employers to top staff up to full pay in respect of the period of time they spend furloughed. Furloughed staff will continue to be entitled to 80% of normal pay subject to the £2,500 cap.

If you require specialist legal advice relating to the updated furlough scheme, please contact Jessica Scott-Dye in our Employment Law Team on 07799 901 428, or complete the form below.

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