As the Coronavirus Job Retention Scheme (CJRS) continues to evolve, this blog deals with the latest incarnation of the scheme; namely the concept of flexible furlough, and represents the position as of 12 June 2020.

When the concept was initially mentioned some weeks ago, it sounded the perfect way to assist in winding down the CJRS whilst also allowing businesses to move staff back to work.  However, the reality is an extremely complex mechanism to manage those staff splitting their time between work and furlough.

1. What is flexible furlough?

Prior to 1 July 2020 employers had to furlough employees for a minimum of 3 consecutive weeks.  From 1 July 2020, flexible furloughing allows employers to bring furloughed employees back to work part time for any length of time, however, there is a minimum claim period of 7 calendar days.  Employers can decide which employees to flexibly furlough along with the number of hours and work pattern in order to best suit the needs of their business.

Employers will be expected to pay normal wages for any hours worked by employers when they are not on furlough.  Whilst fully furloughed employees currently receive 80% of their wages (subject to the £2,500 cap per month), employees who are flexibly furloughed should then receive a proportionate amount based upon the number of furlough hours and the cap will be pro-rated to reflect any hours worked.

2. Which staff can we flexibly furlough?

As long as employees have previously been placed on furlough for a minimum period of 3 weeks prior to 30 June 2020, then you are able to furlough them again at any point up until the end of October 2020 (with their agreement).  This includes flexibly furloughing them from 1 July 2020.

The only exception to this is where employees are returning from maternity, paternity, adoption, shared parental or parental bereavement leave who can be newly furloughed upon their return after 10 June 2020, as long as the employer has used the CJRS for other eligible employees prior to 30 June 2020.

3. Can we flexibly furlough employees who have been on rotating furlough prior to 1 July 2020?

Employees who were furloughed prior to 10 June 2020 and who started a new period of furlough after 10 June 2020 will need to complete the minimum three week period prior to being flexibly furloughed.  For example, an employee placed on furlough on 22 June 2020 (who has previously been furloughed) would need to remain on furlough up to and including 12 July 2020 prior to being flexibly furloughed.

4. How can we claim for flexibly furloughed staff?

In order to claim for flexible furlough, you will need to calculate the employee’s usual working hours and record the actual hours they work as well as their furloughed hours for each claim period.  However, this is an extremely complicated method as can be seen from the HMRC guidance. 

From 1 July 2020, the CJRS rules will change on a monthly basis, and therefore claim periods from 1 July 2020 will be restricted to the same calendar month (although claims for periods of furlough prior to 1 July 2020 will need to be claimed by 31 July 2020). 

If you have a claim that straddles June and July you will need to make separate claims for both months, even if the employee has been continuously furloughed.  You can make more than one claim per month as long as it is for the minimum period of 7 calendar days (unless you are claiming for a few days at the end or beginning of a month).

5. How long can we flexibly furlough staff for?

There is no limit on the length of time that employees can be flexibly furloughed, and employees can enter into a flexible furlough agreement on more than one occasion.

Alternatively, you can leave employees on full furlough and take advantage of the removal of the three week minimum furlough period.

6. Do we need to obtain agreement to flexibly furlough staff?

You should obtain employees’ written agreement to be flexibly furloughed (or reach agreement with a trade union) even if they have previously been furloughed, and you should retain the flexible furlough agreement for 5 years.

7. Is there any limit on the number of staff that we can flexibly furlough?

From 1 July 2020, the number of furloughed employees you claim for (flexible or otherwise) should not exceed the maximum number of employees you claimed for in any period prior to 30 June 2020.  This could affect those employers who previously rotated employees on furlough and who now wish to flexibly furlough all employees.

8. Are there any additional record keeping obligations on employers in relation to flexibly furloughed staff?

In addition to retaining the flexible furlough agreement for 5 years, you should also keep a copy of all records for 6 years including, in the case of flexibly furloughed employees, the usual hours worked along with any calculations that were required for employees, and actual hours worked.

9. Should we be mindful of selecting people to flexibly furlough?

It is clear that the CJRS should be operated in line with employment and equality laws.  Whilst being selected to be flexibly furloughed is not in itself a protected characteristic, you should be mindful that some employees on furlough may have protected characteristics that could give rise to discrimination claims if they are found to have been unfairly selected for flexible furlough over others who remain on full furlough.

10. What should we be thinking about now?

Managing the flexible furlough scheme is likely to be hugely complex and administratively cumbersome.  This is therefore potentially the time to consider the impact of the scheme on your business and your workforce, particularly as the scheme is likely to become less attractive to employers over the next few months as they will have to contribute to the costs of their employees remaining on furlough.

In light of collective consultation timing considerations and the ability to ‘part fund’ notice pay by making employees redundant during furlough, employers may wish to consider the issue of redundancies sooner rather than later.

Beverley Smith
Partner