Alan Price, employment law expert and CEO of HR software and employment law advice service BrightHR, outlines how the new flexible furlough scheme, which starts today, will work.
The government’s new flexible furlough scheme launches today, giving employers the chance to bring staff back part time and still claim grants to cover some of their wages.
Here’s what employers need to know to access the scheme.
From 1st July 2020 only employees that employers successfully claimed a previous government grant for will be eligible for more grants under the Job Retention Scheme.
This means they must have previously been furloughed for at least three consecutive weeks taking place any time between 1st March and 30 June 2020.
Employers should discuss with employees who they wish to place on the flexible furlough scheme, outlining which hours they will be expected to work. Staff will need to agree on the arrangements of their part-time work.
This agreement should be confirmed in writing and a written record kept of it for five years.
Previously, staff needed to be furloughed for at least three weeks to benefit from the scheme. However, flexible furlough agreements can last any amount of time.
That said, the period that employers claim for must be for a minimum period of seven calendar days. Employees can enter into a flexible furlough agreement more than once.
The scheme will allow employers to recover the remainder of wages to a maximum cap. Wage caps are proportional to the hours an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours.
The amount that the scheme will cover will begin to decrease from September 2020, and employers will be responsible for all of the national insurance and pension contributions from August 2020, regardless of the employee being on flexible furlough.
Employers will need to keep records of how many hours their employees work and the number of hours they are furloughed during flexible furlough.
There are two different calculations employers can use to work out their employees’ usual hours, depending on whether they work fixed or variable hours.
Where the employee’s working hours are fixed, or their pay does not vary with the number of hours worked, the reference period for calculating their hours is the hours they were contracted for at the end of the last pay period ending on or before 19th March 2020.
Where an employee works variable hours, employers will use the higher of:
*Alan Price is an employment law expert and CEO of HR software and employment law advice service BrightHR.