What are the rules of the Flexible Furlough Scheme?

8th July 2020

From 1st July the previous Job Retention Scheme has been replaced with the Flexible Furlough Scheme.  The aim of the scheme is to support businesses in gradually bringing back employees through allowing partial furlough grants while they are working on a part-time or shift basis.  If you are intending to use the Flexible Furlough Scheme then you should be aware of your obligations as an employer and to HMRC.

Responsibilities to Employees for Flexible Furlough Scheme

  • Employees should be notified that they are on the new furlough scheme and this must be agreed with them in advance if not covered in their original employment contract.
  • It is your decision whether to “top-up” employee wages in addition to the amount funded by the government through the scheme, but your employees should be fully notified through the correct process of how much they should expect to be paid.
  • Employees must have a new written agreement to confirm the new flexible furlough arrangement, outlining the hours they will be working and the hours they will be furloughed.  Although the guidance is still unclear, you should probably gain written confirmation from employees of their acceptance.
  • If your employee was furloughed at the end of June, then you would still need to observe the minimum 3-week furlough rule before un-furloughing during July.  This means that any employee you intend to bring back into work during July under the new scheme should have been furloughed latest on 10th June under the previous JRS scheme.*
  • As with the previous scheme, employees may take part in training, volunteering or work for another company for the hours they are furloughed, but they may not take on any work that generates revenue for their existing employer.
  • Employees may be asked to take holidays while furloughed, though as an employer you should consider their ability to take an “expected” break given any travel, accommodation or other restrictions.
  • If you are unable to meet minimum contributions for employees when required then you will need to consider your other options as an employer.
  • *Those employees that had been on parental leave when they would otherwise have been furloughed can be furloughed under the new scheme, without having been furloughed under the previous scheme.

Responsibilities to HMRC for Flexible Furlough Scheme

  • There is no longer any minimum time that an employee should be furloughed for.  However, any claim period should include a minimum of 7 days, unless there are fewer days at the beginning or end of a month that can be tagged on to the next/previous month’s claim.
  • To calculate the amount to be claimed you will need to record “usual hours worked“, “actual hours worked” and “actual hours furloughed“.  There is extensive guidance and multiple examples of calculations from HMRC.
  • Be cautious.  The calculations are much more complex than under the previous scheme.  “Usual hours worked” is not calculated as you would expect, the ICAEW has a useful explanation of this.  You should seek professional advice and assistance for your payroll and scheme claims to avoid any future repayments.
  • Employees should be paid directly by the business for the hours that they are working.  Any furloughed hours are eligible to receive government funding under the Flexible Furlough Scheme.
  • Employees can only be furloughed under the Flexible Furlough Scheme if they have previously have been furloughed for at least three consecutive weeks under the previous JRS before or from 10th June 2020.*
  • The number of employees claimed for under one claim can not exceed the number claimed within previous JRS claims.  For example, if you have previously only claimed for 30 employees under JRS, you may not claim for 35 under the new scheme.*
  •  If your business still requires the support of full-time furlough then you will be able to continue to claim for this using the Flexible Furlough Scheme.
  • Claim periods must fall within one calendar month. e.g. You may not make a claim that includes periods within August and September.  Each of these must be under a separate claim.
  • Only one claim per period can be made, and claim periods cannot overlap. This means that each claim must contain all furloughed/flexibly furloughed staff, even when their paydate differs.  To simplify your claim you should try and keep your claim dates in sync with your payroll dates.
  • Claims can be made from 1st July.  However if you claim before the end of the month and an employee works additional hours then you will need to repay the amount for these hours claimed to HMRC.
  • Any over- or under-payments on previous claims can be adjusted in future claims.

Phasing of Support

The Flexible Furlough Scheme represents a gradual reduction of support for businesses affected during the Covid-19 pandemic.  The level of grant will phase out as follows, with the scheme ending on 31st October.

July August September October
80% up to £2500 80% up to £2500 70% up to £2187.50 60% up to £1875
No employer NIC or pension contributions required No employer NIC or pension contributions required Employer NIC and pension contributions required.  Employer contributes 10% wages up to £312.50 Employer NIC and pension contributions required.  Employer contributes 20% wages up to £625

You only have until 31st July to claim for any furlough periods up to and including 30th June under the previous JRS.

Next Steps

You should seek professional advice for claims under the job retention scheme and flexible furlough scheme.  Mistakes, even honest ones, will come under future scrutiny by HMRC, at which point you will need to pay back any overpayments.  To avoid this happening, along with any potential penalties or fines, it is best to ensure all claims are correctly calculated from the start.  Speak to our expert payroll team in assistance with all furlough claims. 

All information correct at time of going to print/live and on the best knowledge and understanding of the author at the time.  This article is for general information only and does not constitute financial advice or recommendations for individual circumstances.  No responsibility is taken for any actions taken on the base of the information within this article.


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