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Flexible furlough: what are the rules?
- AuthorClare Gilroy-Scott
‘Flexible furlough’, part of the government’s Coronavirus Job Retention Scheme, has been extended until the end of April 2021.
What is ‘flexible furlough’?
Flexible furlough gives employers the opportunity to furlough employees for any amount of time and any work pattern, meaning there is no minimum number of weeks or days that an employee must be on furlough, subject to the 7 calendar day minimum claim period. It is beneficial if employers are in a position to provide some, but not all, work to their workforce.
Who can be put on flexible furlough?
Employees on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts can be put on flexible furlough as long as they were employed and on the payroll from 30 October 2020.
How much will an employee that is flexibly furloughed be paid?
Employers will have to pay their employees in full for any hours each employee works. For the hours the employees are furloughed, at least 80% of their regular wages, up to a maximum of £2,500 per month, will be paid by the government. The Employer will be required to top up their pay unless they have reached an agreement with their employees that they will only receive 80% during furlough.
What steps will the employer need to take when putting their employees on flexible furlough?
The employer will need to agree the furlough arrangement with the employee (or reach collective agreement with a trade union). Employees can enter into a flexible furlough agreement more than once and they can last any amount of time. However, the period that the employer can claim for must be for a minimum claim period of seven calendar days.
What records will the employer need to keep?
The employer will need to keep the written agreement that confirms the new flexible furlough arrangement. In addition, the employer will need to keep accurate records of how many hours the employees work and the number of hours they are furloughed in order to calculate the furloughed hours for the claim period.
How do employers make their furlough pay claims for flexible furloughed employees?
The employer will make a claim through the portal in the same way that it would for staff that have been furloughed full-time. However, unlike fully furloughed employees where the employer only needs to work out the maximum wage amount, the employer will need to work out the employee’s usual hours and record the actual hours they have worked, as well as their furloughed hours for each claim period. In order to work out an employee’s usual hours for each pay period, the government’s specific calculation will need to be used.
There are two calculations to be used depending on (i) whether the employee works for a fixed number of hours; or (ii) their hours vary, i.e. they are not contracted to a fixed number of hours or their pay depends on the number of hours worked. There are particular rules relating to claim periods that relate to either the first few days or the last few days of a month and employers should seek clarification as needed.
Is anything subject to change?
While the government has extended the scheme until April 2021 and has confirmed that the contributions an employer is required to make will continue at the current level, i.e. at 80% of wages up to a monthly cap of £2,500, some furlough pay calculations in March/April 2021 should refer back to the corresponding month in March/April 2019, and not March/April 2020 as that would involve looking at a period when people might already have been on reduced pay due to furlough.
This note is accurate as at 8 February 2021 and is only a summary of a number of points, it is not intended to be a complete guidance to furlough arrangements.
This article was written by Clare Gilroy-Scott, Partner, Employment, and Charlotte Moorhouse, Trainee Solicitor. Please contact Clare Gilroy-Scott or Alexandra Bonner to discuss any of the points raised in this article further.
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This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.