The Government announced a new flexible furlough scheme on Friday, but how will it work?
The Chancellor announced on Friday that the furlough scheme will be available on a flexible basis from 1st July. But how will that work?
Under the flexible element of the scheme, employers can bring people back just a few days a week and the government will top up their wages for the hours they are not able to work. The full-time furlough scheme is still available until October for those employers who cannot reopen, but will be tapered with employers having to start paying a contribution towards it from August.
There is no minimum or maximum number of working hours for employees on flexible furlough and employers will be able to report and claim for periods of just one week at a time. That means people could work different hours in different weeks. More guidance is expected on 12th June.
Employees who are currently on furlough can be moved to the flexible furlough scheme, but they will require a new furlough agreement as it is a change to their terms and conditions. If a company wants to furlough someone who is not currently furloughed they will need to do so by 10th June so that they can be on the scheme for the minimum three weeks when the scheme closes to new joiners on 30th June.
Employers will have to pay the usual rate for hours worked under the scheme, including all tax and National Insurance contributions. It is still unclear if they can cut people’s pay when they return from furlough. They will then be able to claim the hours employees are not able to work from the furlough scheme, based on their contracted hours.
Employers will need to track the hours flexibly furloughed staff work. A move to a flexible furlough scheme will need to be agreed by both employer and employee and confirmed in writing.
The scheme is open to all employers, with the government saying it recognises that different businesses face different impacts from coronavirus, but they will need to show their operations have been severely affected by coronavirus, meaning they might have to lay people off as a result.
The guidance makes clear that the government will check claims made through the scheme and that claims based on dishonest or inaccurate information or found to be fraudulent will need to be repaid in full to HMRC. An online portal will be made available for employees and the public to report suspected fraud.
Meanwhile, on furlough generally, employment rights experts are warning that furloughed staff who are laid off could see their redundancy payouts reduced due to a loophole, with some employers basing pay-offs on a worker’s furloughed rate of pay.