UPDATE – The UK Coronavirus Job Retention Scheme (CJRS) – The Flexible Furlough Scheme

In accordance with the recent announcement from the Chancellor, Rishi Sunak, from 1 July 2020, businesses will have the flexibility to bring previously furloughed employees back to work part-time, with the government continuing to pay 80% of wages for any of their normal hours that they do not work up until the end of August.

The following is a summary of the government’s guidance on the flexible furlough scheme. For further details on this and other forms of COVID-19 business support, go to https://www.gov.uk/coronavirus/business-support

The flexible furlough scheme – important points to note:

• The flexibility is to commence a month ahead of schedule to help people get back to work.
• Businesses can decide the hours and shift patterns that are going to work best for them and their employees under the scheme, meaning that employees can work as much or as little as the business needs.
• There will be no minimum period that businesses will need to furlough staff. HOWEVER, any working hours arrangement that a business agrees with a furloughed employee must cover at least one week and be confirmed to the employee in writing.
• When claiming the CJRS grant for furloughed hours (and it is based on hours, not days), a business will need to report and claim for a minimum period of a week, BUT businesses can choose to make claims for longer periods, such as on monthly or two weekly cycles if they prefer.
• Businesses will be required to submit data on the usual hours an employee would be expected to work in a claim period AND the actual hours worked

Furloughed employees

Although the flexible furlough scheme allows employees to return to work part-time from 1 July, it is still possible to keep employees fully furloughed and continue to claim the full extent of the grant under the CJRS within the existing rules.

How to calculate what you can claim under the flexible furlough scheme

Where an employee is flexibly furloughed, the business needs to work out the employee’s usual hours and record the actual hours they work as well as their furloughed hours for each claim period.

There are different calculations to work out an employee’s usual hours, depending on whether they work fixed or variable hours.

A business needs to work out usual hours for employees who work variable hours, if either:

• the employee is not contracted to a fixed number of hours; or
• the employee’s pay depends on the number of hours they work,

If neither of these applies, it is necessary to work out your employee’s usual hours for an employee who is contracted for a fixed number of hours.

It is not expected that the employee’s working pattern matches their pay period, such that they may have a contracted number of hours per week but be paid monthly, for example.

Work out your employee’s usual hours for an employee who is contracted for a fixed number of hours and whose pay does not vary according to the number of hours they work

HMRC states that the employer should calculate the usual hours for each pay period, or part of a pay period, that falls within the claim period.

To calculate the number of usual hours for each pay period (or partial pay period):

• Start with the hours your employee was contracted for at the end of the last pay period ending on or before 19 March 2020.
• Divide by the number of calendar days in the repeating working pattern, including non-working days.
• Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for.
• Round up to the next whole number if the outcome isn’t a whole number.

If an employee with fixed hours was on annual leave, off work sick or on family related statutory leave at any time during the last pay period ending on or before 19 March, the usual hours should be calculated as if the employee had not taken that leave. Here are some examples.

Work out your employee’s usual hours for an employee who works variable hours

Where the pay varies by the amount of time worked, you will have shown the number of hours worked on your employees’ payslips in line with legislation introduced by BEIS in April 2019 (Employment Rights Act 1996, section 8). You are therefore likely to have records of the number of hours worked.

The ‘usual hours’ in this case will be calculated based on the higher of either:

• the average number of hours worked in the tax year 2019 to 2020,
• the corresponding calendar period in the tax year 2019 to 2020.

You need to calculate the usual hours for each pay period, or part of a pay period, that falls within the claim period.

When you calculate the usual hours, you should include:

• any hours of leave for which the employee was paid their full contracted rate (such as annual leave),
• any hours worked as ‘overtime’, but only if the pay for those hours was not discretionary.

To work out the usual hours for each pay period (or partial pay period) based on the average number of hours worked in the tax year 2019 to 2020:

• Start with the number of hours worked (including paid leave) in the tax year 2019 to 2020 before the employee was furloughed, or the end of the tax year if earlier.
• Divide by the number of calendar days the employee was employed by you in the tax year 2019 to 2020, up until the day before they were furloughed, or the end of the tax year if earlier.
• Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for.
• Round up to the next whole number if the outcome isn’t a whole number.

Here are some examples

If you would like help with any of the above, please email Rooney Nimmo Partner Dawn Robertson, or call 0131 220 9579.

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