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COVID-19 Information Hub

Flexible Furloughing – Changes To The Job Retention Scheme

The Coronavirus Job Retention Scheme (JRS) was introduced on 20 March 2020, and many businesses have been utilising the scheme to support their employees.

From 1 July changes have been made to the scheme, with the government introducing ‘flexible furloughing’ one month earlier than originally planned.

Updated 17/6/2020

The changes to the scheme will allow employers to bring back previously furloughed workers on a part-time basis, with the employer paying them for when they are working and the government paying 80% when they are not. While this additional flexibility will be welcomed by all employers and employees, the news that the government is reducing the level of financial support from 1 August, with the scheme closing on 31 October has come as a severe blow to struggling businesses.

While flexible furloughing is aimed at giving employers the flexibility they need to get their businesses back up and running, the necessary time and skills to administer such a scheme could potentially mean that for some businesses the costs start to outweigh the benefits.

Please read on for our commentary and analysis of the main changes to the scheme and please note, this information is based on our understanding and interpretation of the latest government announcement on 12 June. Supplementary guidance may be issued by the government at any time, which may change this advice. This article should be read in conjunction with our previous article, Coronavirus Job Retention Scheme – The basics.

We recommend any employer utilising the JRS flexible furloughing to seek professional advice or read the GOV.UK issued guidance for full details.

In this article, we will address:

  • Changes to grant levels
  • Changes to eligibility
  • Flexible furloughing agreements
  • Claim periods
  • Calculating an employee’s ‘usual’ hours
  • Calculating an employee’s ‘furloughed’ hours
  • Calculating the amount to claim

Changes to grant levels

Period to 30 June

No changes to the grant levels in June for both furloughed pay and Employer National Insurance Contributions (ER NICS) and Employer Pension Contributions (ER Pension)

1 July

Flexible furloughing begins and employers can bring back previously furloughed workers on a part-time basis, with the employer paying an employee’s wages when they are working and the government paying 80% when they are not

  • The government’s support will be capped at £2,500, and the cap will be proportional to the hours an employee is furloughed in all cases
  • Employers are still able to make a claim for ER NICS and ER Pension

1 August

  • Employers will no longer be able to make a JRS claim for ER NICS and ER Pension
  • The level of government support for furlough pay will remain at 80%

1 September

  • The level of government support for furlough pay will reduce to 70% of wages up to a cap of £2,187.50
  • The employer will be required to make up 10% of wages to a cap of £2,500

1 October

  •  The level of government support for furlough pay falls by a further 10%
  • The government will pay 60% of wages up to a cap of £1,875
  • The employer will be required to make up 20% of wages to a cap of £2,500

31 October

  • The scheme will close
  • An employer must decide if an employee can return on their usual hours, or perhaps, whether reduced hours and pay, or redundancy must be considered

Changes to eligibility

Period to 30 June

  • The minimum period an employee must be on furlough is three consecutive weeks.  New flexible furloughing cannot start until the end of this period
  • If an employee is working, but on reduced hours, or reduced pay, they will not be eligible for a grant under the JRS scheme

1 July

  • Employers can bring furloughed employees back to work for ANY amount of time and ANY work pattern, while still being able to claim the grant for the hours not worked
  • Only employees that you have successfully claimed a previous grant for will be eligible
  • They must have been previously furloughed for at least three consecutive weeks any time between 1 March and 30 June 2020.  This means that the last day an employee could have started furlough for the first time was 10 June
  • Where a previously furloughed employee starts a new furlough period before 1 July, this furlough period must be for a minimum of 3 consecutive weeks.  Eg. A previously furloughed employee starts a new furlough period on 22 June, this furlough period continues for at least three consecutive weeks ending 12 July.  Only after 12 July can this employee be flexibly furloughed
  • After 1 July, employers cannot make claims that cross calendar months, so an employer will need to make a separate claim for the period up to 30 June.  This isn’t an issue where claim periods have always been made for a month
  • The maximum number of employees an employer can claim for in a single claim period starting from 1 July cannot exceed the maximum number of employees you claimed for under a claim ending by 30 June

The position is different for employees returning from statutory parental leave

  • You can furlough an employee returning from statutory parental leave after 10 June even if you are furloughing them for the first time (subject to certain conditions)
  • The maximum number of employees an employer can claim for should be increased by the number of employees you are furloughing for the first time due to them returning from statutory parental leave

Flexible furloughing agreements

An employer is required to agree the new arrangements with the employee and keep a written record of the agreement, although having this signed by the employee is not necessary.

  • The flexible furlough agreement must include the number of hours an employee will work and the number of hours they will be furloughed
  • The agreement can last for any amount of time, the 3-week minimum no longer applies
  • Employees can enter into a flexible furlough agreement more than once

Claim periods

Employers have until 31 July to submit claims for periods ending on or before 30 June.  After 1 July, employers cannot make claims that cross calendar months.

This means that separate claims will need to be submitted for furloughed days in June and the days in July, even if the employees are furloughed continuously.  Claim periods must start and end within the same calendar month and must last at least seven days unless an employer is claiming for the first few days or last few days in a month. Also, any claim cannot overlap with any other claim.

Importantly, an employer can only make one claim for any period, so it’s critical to include all furloughed or flexibly furloughed employees in one claim even if they are paid at different times.

It’s logical to match a claim period to the dates payroll is processed wherever possible as this will keep things simpler.

From 1 July, additional information is required in the HMRC portal.  An employer will need to calculate and enter the number of ‘usual’ hours an employee would work in a claim period, the number of hours your employee has or will work in the same period and by deduction, the number of furloughed hours an employee has been furloughed.

It’s therefore imperative when claiming for flexibly furloughed employees, that an employer waits to make a claim until they have certainty as to the exact number of hours an employee will have worked during the claim period.  If an incorrect amount is claimed, then an employer will have to correct the error and in the case of any overclaim, pay some of the grant back to HMRC.

As previously, payments will be made six working days after the claim is made.

Calculating an employee’s ‘usual’ hours

If an employee is flexibly furloughed, an employer is required to calculate an employee’s usual and furloughed hours. The GOV.UK website provides different methods for whether an employee works fixed or variable hours.

As with the government’s method for calculating furlough pay, the method for calculating usual hours is based on the number of calendar days in a claim period and not working days.

An employer is required to take the hours an employee was contracted for, divide by the number of calendar days in the repeating work pattern and multiple by the number of calendar days in the pay period.  Calendar days include non-working days.

As an example, an employee is contracted for 37.5 hours each week, across five working days, with an annual salary paid in equal instalments each month.  The employee is flexibly furloughed from 1 July, agreeing to work 4 hours each day.

  • Calculate the usual hours for the pay period (1 July – 31 July)
    • Contracted hours per week = 37.5
    • Divide by the number of calendar days in the repeating work pattern = 7 days (i.e. one week)
    • Multiply by the number of calendar days in the pay period = 31 days (in July)
    • = 166.07 hours round up to 167 hours

The method given by the government for calculating usual hours for an employee on variable hours is on a different basis, and we advise anyone needing to make this calculation take professional advice or refer to the GOV.UK website for further details.

Calculating an employee’s ‘furloughed’ hours

An employer is required to agree with an employee how many hours they are going to work in a claim period; this is subtracted from the usual hours to give the number of furloughed hours.

In our example above, the employee is flexibly furloughed from 1 July, and the employer and employee agree that the employee will work 4 hours each day.

  • The employee will work 4 hours x 23 days in the claim period = 92 hours
  • The employee is therefore furloughed for 167 – 92 hours = 75 hours

Calculating the amount to claim

Once an employer has calculated an employee’s usual and furloughed hours, they can use the online calculator to work out what can be claimed in most, but not all situations and you may, therefore, need to use the manual method.

The manual method involves taking 80% of an employee’s usual wage (subject to the cap), multiplying by the furloughed hours and dividing by an employee’s usual hours.

In our example above, the employer has calculated that 80% of the employee’s usual wage is £1,800. This is less than the cap for a full month of £2,500.

  •  £1,800 x furloughed hours / usual hours
  • = £1,800 x 75 hours / 167 hours = £808.38

For periods from September onwards, the grant calculation will change as the level of government support reduces. Therefore, in addition to the above, an employer will need to add extra steps:

  • Divide by 80 (the current level of government support is 80%)
  • Multiply by 70 for September (the government will support 70%)
  • Multiply by 60 for October (the government will support 60%)

Until 30 June, an employer can claim for the ER NICS and ER Pension on furloughed pay. However, from 1 July, an employer has to adjust any calculations to reflect furloughed hours and from 1 August, can no longer make a claim for ER NICS or ER Pension whatsoever.

Coronavirus Job Retention Scheme – The Basics


Kirk Rice LLP can support you to manage and pay your team effectively with flexible furloughing. For more information, please email info@kirkrice.co.uk.

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