News and Events

Flexible furlough extended to September 2021: what are the rules?

View profile for Clare Gilroy-Scott
  • Posted
  • Author

‘Furlough’, part of the government’s Coronavirus Job Retention Scheme, has been extended until the end of September 2021, this includes the ability to put workers on “flexible furlough”.

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, allowing some work to be done. It is beneficial if employers are in a position to provide some, but not all, work to their workforce. 

Employers do not need to place all their employees on furlough and can continue to fully furlough employees. Note that employees cannot undertake any work for the employer during time that they are recorded as being on furlough.

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 or full-time furlough as long as they were employed and on the payroll on the following dates:

For periods ending on or before 30 April 2021, employers can claim for employees who were employed on 30 October 2020, as long as the employer made a PAYE Real Time Information (RTI) submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. The employer does not need to have previously claimed for an employee before the 30 October 2020 to make claim in respect of that employee. 

For periods starting on or after 1 May 2021, employers can claim for employees who were employed on 2 March 2021, as long as the employer had made a PAYE RTI submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee. The employer does not need to have previously claimed for an employee before 2 March 2021 to claim for periods starting on or after 1 May 2021.

How much will an employee that is flexibly furloughed be paid?

Until the end of June 2021 the position is as follows:

Employers will have to pay their employees in full for any hours the 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. Employers will have to cover the cost of employer’s pension contributions and employer’s national insurance contributions as before.

From July 2021, the employer will have to contribute 10% to the wages on furlough (up to £312.50) and in August and September 2021, the employer contribution will increase to 20% (up to £625). Employers will have to cover the cost of employer’s pension contributions and employer’s national insurance contributions as before.

The government contribution will decrease to 70% in July 2021 and to 60% in August and September 2021 (subject to the cap).

Employers can continue to top up the employee’s wages to their full pay, at their own expense.

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) and this should clearly set out the payments the employee will receive during periods of furlough and periods of work as well as the government contribution and the employer contribution, to avoid any doubt. 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.

Any changes to the employee’s contract should be agreed in the usual way.

What records will the employer need to keep?

The employer will need to keep the written agreement that confirms any and all flexible furlough arrangements with individual employees. In addition, the employer will need to keep accurate records of how many hours the employee works 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. (see below for anticipated change in this regard)

Is anything subject to change?

While the government has extended the scheme to September 2021 and has confirmed that the contributions an employer is required to make will be as set out above, we are awaiting further detail as to furlough pay calculations for May to September 2021 for workers without fixed hours. It is anticipated that the position will be the same as when the scheme was extended to March and April 2021 when the Treasury confirmed that the position 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 4 March 2021 and is only a summary of a number of points, it is not intended to be a complete guidance to furlough arrangements. Further guidance from and the Treasury is anticipated.

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.

Employment Law at Goodman Derrick

Our London based employment law team take a commercial approach to advising clients in relation to their HR and employment law matters. 

The employment law team assist with employment contracts and policies, internal processes, restructures, redundancies, employment disputes and negotiations, business protection, DSAR responses and document reviews, as well as being highly experienced and successful representatives in employment tribunal and appeal court proceedings.

We adopt a team based approach and take a real interest in our clients and their businesses, enabling us to deliver an effective and tailored service.

As well as helping our clients manage their day to day HR issues we also offer the following support:

  • regular email updates on topical employment issues
  • breakfast seminars and workshops on hot topics as and when they arise
  • bespoke internal training to deal with areas of risk or to help with organisational change

For more information about our London based employment law service please click here

More information

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.