Bringing employees back to work: the Chancellor announces furlough scheme flexibility from 1 July

On 29 May, the UK's Chancellor set out details on how the Coronavirus Job Retention Scheme (CJRS) will continue to support jobs and businesses as people return to work, saying that “now, as we begin to re-open our country and kick-start our economy, these schemes will adjust to ensure those who are able to work can do so". Further clarification was published in guidance on 12 June.

The government has responded to calls by employers requesting greater flexibility of the furlough scheme, which currently does not permit employees to work if they receive payments under the CJRS. From 1 July businesses can bring furloughed employees back to work part time (this is a month earlier than previously publicised), allowing employers to take steps to re-open their businesses with employees working different shift patterns and initially on reduced hours.

The Chancellor also announced that from August until the end of October the level of government grant provided through the CJRS scheme will be slowly tapered to reflect that people will be returning to work. Businesses will be asked to contribute an increasing, although still modest, share of employment costs, but individuals will continue to receive 80% of their salary up to £2,500 per month covering the time they are unable to work.

1 July: Flexible furloughing permitted to help employees get back to work

A government fact sheet and policy summary together with updated guidance provides details of ‘flexible furloughing’. From 1 July, employers will be able to bring furloughed employees back to work with individual businesses deciding on the hours and shift patterns their employees will work. Employers will pay for the hours worked by employees including tax and NICs on those payments and claim under the CJRS for the balance of normal hours not worked (with an adjusted claim in relation to any pension contributions; this is for July only as for periods from 1 August employers will not be able to make any claims under the CJRS in relation to pension contributions). So for example, an employee could work three days a week (paid by the employer) and be furloughed and paid under the CJRS for two days a week.

Although there will no longer be a minimum furlough period, employers will need to report the hours and claim under the CJRS for a minimum of a week. Guidance published on 12 June provides assistance in working out employees' usual hours and furloughed hours and how to claim. While employers will need to accurately record employees' hours worked this will give them the flexibility to dip in and out of providing work depending on the level of uptick in demand as businesses in different sectors re-open.

To be eligible for the grant, employers will have to agree with their employees any new flexible furloughing arrangement and confirm that agreement in writing.

August to October 2020: How CJRS furlough payments will taper

The government has calculated that during August, for the average claim, employers will be paying 5% of the gross employment costs the employer would have incurred had the employee not been furloughed. During September and October this rises to 14% and 23% respectively.

30 June: Closure of the CJRS to new entrants

The CJRS is currently planned to expire at the end of October. The Chancellor previously indicated that it would close to new entrants from 30 June. From that date employers will only be able to continue to furlough employees that they have furloughed for a full three-week period prior to 30 June. This means that the last date on which an employer could furlough an employee for the first time was 10 June, in order for the current three-week furlough period to be completed by 30 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. This is the case regardless of whether the 3 consecutive week minimum period ends before or after 1 July. So if a previously furloughed employee started a new furlough period on 22 June it would have to continue for at least 3 consecutive weeks ending on or after 12 July. After this the employee can then be flexibly furloughed for any period.

Separate CJRS claims will need to be submitted to cover the days in June and the days in July that employers want to claim for, even if employees are furloughed continuously. This may mean that employers claim periods will differ from the pay periods they use. The first time employers will be able to make claims for days in July will be 1 July, and 31 July will be the last day that they can submit claims for periods ending on or before 30 June.

On 9 June The Government has confirmed that parents on statutory maternity and paternity leave who return to work in the coming months will be eligible for the furlough scheme even after 10 June cut-off date for new entrants. This right has also been extended to reservists who have been in active service during the coronavirus outbreak and are now returning to work and may be placed on furlough. These rights will only apply where such individuals work for an employer who has previously furloughed employees.

Next steps for employers

Employers should consider, and if appropriate, agree flexible working arrangements with employees which can take effect from 1 July. Such arrangements should cover the hours staff will be working and the hours they will be furloughed. Alternatively businesses may seek to bring some employees back on their normal working pattern while continuing to furlough others. This will require careful planning to avoid any circumstances which could give rise to unlawful discrimination. And to ensure that they can provide accurate flexible pay and furlough calculations, employers will need to keep careful records of employees' work patterns over the coming months.