Flexible Furlough Scheme: your questions answered

1. Who is eligible for flexible furlough?

For an employee to be eligible for flexible furlough leave, an employee must have been furloughed for a minimum of three consecutive weeks between 01 March and 30 June, and the employer must have successfully claimed a grant in respect of that employee.

From 01 July, there will be a cap on the number of employees who can be furloughed at any given time.  The number of employees you can claim for in any claim period starting from 01 July cannot exceed the maximum number of employees you claimed for under any claim ending by 30 June.

The only permitted exceptions to this rule are in relation to any first-time furloughed employees who are returning to work, after 10 June, from a period of maternity, shared parental, paternity, adoption or parental bereavement leave, or an employee who is a military reservist and who is returning to work after 10 June.

2. How is flexible furlough implemented in practice?

The Government guidance states that a written agreement confirming the new flexible furlough arrangement with the employee is needed – this should be formalised by way of a variation to the employee’s contract of employment. It is advisable that this is documented in a formal written and signed agreement.

3. Is there a minimum length flexible furlough period that an employee must take?

Any employee previously furloughed that started a new furlough period after 10 June but before 1 July, will still have to be furloughed for a minimum period of three weeks. No work can be undertaken in order to qualify for the flexible furlough grant during that three-week period. New periods of furlough, that start on or after 01 July may be for any period of time. Employees will be able to work as much or as little as the business needs, with no minimum time during which they must be on furlough, for their employer to claim under the CJRS.  However, claims under the CJRS must be for a minimum of seven calendar days.

4. When can furloughed employees start to carry out work duties under the new flexible furlough scheme?

From 01 July, a furloughed employee can carry out work on a flexible basis (with the employee’s consent), meaning that they can carry out some work while the employer is still able to claim for the Government grant for the hours that the employee is not working.

5. Do all furloughed employees have to carry out work to continue to claim the grant funding?

No, if you are not in a position to provide any work, employees can continue on full furlough, subject to an increased contribution from 01 August onwards ensuring that the employee continues to receive a minimum 80% of their regular wages (capped at £2,500 per month). In September and October, the government grant reduces to 70% and 60% of wages, respectively, and the employer is required to contribute 10% and 20%, respectively, of the 80% furlough pay.

6. Is an employee able to refuse to consent to extended furlough or to flexible furlough?

Flexible furlough leave needs to be agreed with the employee. Employers will need to check the relevant furlough agreement and ensure that any variations are agreed to cover the flexible working arrangements that you wish to implement between 01 July and 31 October. Refusal of furlough or flexible furlough could lead to a redundancy process and termination of employment.

7. Who chooses the working pattern for employees returning to work using flexible furlough?

The Government guidance states that the employer can bring back a furloughed employee for any amount of time and work pattern. You will need to obtain an agreement in writing from the employee that they agree to the days, hours and shift patterns that they will be required to work.

8. If an employer currently rotates employees on furlough, can these employees all be put on part-time furlough?

It will not be possible for employers to claim for more employees than they have previously, in one claim period. For instance, if half of the employees currently carry out some work and the employer claims for the other half of employees, on a rotation basis, from 01 July, the employer cannot reduce hours to 50% and furlough all these employees, if the new claim exceeds the number of employees in the highest claim submitted up to the end of June.

By way of example, if an employer previously made claims for, say, 40, 50 and 70 employees, but in total there have been 90 employees furloughed altogether, from 01 July, 70 would be the maximum number of employees you could claim for in any claim period.

9. Can an employer agree a pay cut for the hours worked?

There is currently nothing in the guidance to prevent a pay cut being agreed for employees. National Minimum wage legislation will need to be adhered to for all hours worked. Therefore, it would appear to be possible to agree a reduced salary/hourly rate of pay for the hours worked, whilst the time furloughed will be based on the scheme rate in line with the formula set out for working out furlough pay.

10. Can an employee be flexibly furloughed and then return to normal furlough leave?

Yes, from 01 July 2020, employers will be able to bring furloughed workers back to work on a part-time basis, if appropriate, while still being able to claim under the CJRS for hours not worked. However, this is only possible in respect of those workers whom the employer has successfully claimed for under the CJRS previously, that is, those workers who have been furloughed for at least three consecutive weeks at any time between 01 March and 30 June.

11. Can an employee who is shielding remain on furlough or flexible furlough until the end of the scheme?

The current position remains that there is no legal entitlement for an employee who is shielding to be furloughed and no obligation on an employer to keep an existing employee on furlough leave until 31 October. Employers should, however, be cautious and flexible in their approach when dealing with employees that are shielding as they may, potentially, be disabled under the Equality Act 2010, and/or because of obligations that employers must adhere to under health and safety legislation.

As businesses start to re-open following further lockdown restrictions being lifted, there will be an increased demand in some sectors for employees to return to actual places of work. The collective guidance is very clear that employees who are shielding should be allowed to work from home, where this is possible. Where this is not possible, this may mean that, in some cases, furlough should be maintained, although, for some businesses, this may not be cost-effective or affordable once the Government’s contributions towards employment costs start to taper from 01 August.

12. What records should an employer keep in relation to furlough and flexible furlough arrangements and for how long?

An employer is required to keep a written record of the agreed flexible furlough working arrangements for a period of at least five years.

However, the following information should be retained for at least six years:

• Amount claimed and claim period for each employee;
• Claim reference number associated with each claim;
• Breakdown of calculations (HMRC may query this);
• Details of usual hours worked, including any calculations that were required, for employees that were flexibly furloughed; and
• Details of actual hours worked for employees that were placed on flexible furlough.

Please note, the information included in this update is correct at the date of publishing.