The flexible furlough scheme

Following the Spring 2021 Budget we report on updates to the Coronavirus Job Retention Scheme (“CJRS”), which will now run until 30 September 2021.

Under the rules of the CJRS, employers can make use of ‘flexible furlough’, which allows for employees to carry out some of their normal working hours while being furloughed for those hours they are not working. Employers therefore have the option to bring employees back to work on a part time arrangement, but can still keep employees fully furloughed if they are not currently required.

Furloughed employees are entitled to receive 80% of their wages, capped at £2,500 per month, for all hours not worked. The respective contributions of the government and employers towards the wage costs for furloughed employees will be as follows:

• • Until 30 June 2021: The government will pay 80% of wages up to a cap of £2,500. Employers will be required to meet the associated employer National Insurance and minimum pension contributions for any normal hours not worked.

• • 1-31 July 2021: The government will pay 70% of wages up to a cap of £2,187.50. Employers will be required to pay the further 10% of wages together with employer National Insurance and minimum pension contributions, for any normal hours not worked.

• • 1 August – 30 September 2021: The government will pay 60% of wages up to a cap of £1,875 and employers will be required to pay the further 20% of wages together with employer National Insurance and minimum pension contributions, for any normal hours not worked.

All employers with a local bank account and a UK PAYE scheme can potentially claim support under the CJRS and employers do not need to have used the scheme previously. For periods ending on or before 30 April 2021, employers can claim for employees that have not previously been placed on furlough, provided that they were on the payroll by 11.59pm on 30 October 2020. For periods starting on or after 1 May 2021, employers can claim for employees that have been employed from 2 March 2021.

The minimum period for which an employer can claim is one week, unless claiming for the first or last few days of the month, and there is no minimum number of hours or length of time for which an employee must have been placed on furlough. Prior to the introduction of flexible furlough, employees had to have been furloughed for 3 consecutive weeks, but this requirement no longer applies. There is also no longer any cap on the number of employees that an employer can claim for.

HMRC have produced a series of examples on how to calculate the hours the employees are working and how their pay may change: see here.

Employers should bear in mind that normal employment law principles related to variation of working hours and other terms continue to apply in respect of periods of furlough. Employees must therefore reach agreement with each employee on the terms of their furlough, and this should be set out in writing. It may be necessary to update existing agreements where the furlough period or terms are being extended or altered. Employers must also be careful to ensure that they do not unlawfully discriminate when selecting employees for furlough, or act in a manner which undermines the relationship of trust and confidence with an employee.

For practical advice on the CJRS, furlough, and any advice in relation to these updates, including how to furlough your employees or any of the other employment law implications of the coronavirus pandemic, please don’t hesitate to contact us.