15 Sep 2020
The Furlough-down: How to use flexible furlough
Just as you were getting used to the furlough scheme, on 1st July the government introduced a new concept through the CJRS called ‘flexible furlough’.
We get asked about this, and other Coronavirus Jobs Retention Scheme matters, a lot! So, we have collated a number of frequently asked questions that may be of some relevance to you and your business.
We've broken them down into five topics, simply click the links below to read each article:
- An update on furlough and the Coronavirus Jobs Retention Scheme
- Flexible furlough - what is it and how to use it (THIS ARTICLE)
- Exiting furlough and unfurloughing staff
- Making redundancies in a covid world
- Changing staff terms and conditions
What is the Flexible Furlough Scheme?
Just as you were getting used to the furlough scheme, on 1st July the government introduced a new concept through the CJRS called ‘flexible furlough’.
The flexible furlough scheme is only open to employees who have been previously furloughed for at least 3 weeks prior to 30th June (unless the employee returns later due to a period of family-related leave such as maternity/paternity etc).
The concept of ‘flexible furlough’ means that furloughed employees can return to work on a part-time basis from 1 July. Employees must be paid their full rate for any hours they actually work, and then at least 80% for any normal hours in which they are furloughed.
If you are utilising the flexible furlough scheme, you should agree any changes in the working pattern with your employees and confirm it in writing. Ensure you keep records of hours worked by each employee and the hours in which they are furloughed.
From 1st July, it ceased to be possible to submit a claim through the CJRS across different calendar months (for example, making one claim for a 3 month period). Furthermore, each claim period must be for a least a week, but can be for longer.
The tapering contributions expected from August apply to the parts of the employee’s “furlough time” on a pro-rata basis It is therefore imperative to keep appropriate records of the hours worked or on furlough and what is claimed under the CJRS.
What does the Employer pay?
Aside from any decision to “top up” a furloughed employee’s ay, employers are required to make tapered contributions towards an employee’s furlough pay (which should still be 80% of their normal pay up to £2,500) as follows:
- September 2020: Employers will also be required to pay 10% of employees' pay, capped at £312.50. The government will pay 70% of employees' pay, capped at £2,187.50; and
- October 2020: Employers will be required to pay 20% of employees' pay, capped at £625. The government will pay 60% of employees' pay, capped at £1,875.
Does an employee have a right to be furloughed?
Contrary to popular belief, the furlough scheme did not confer a ‘right’ for an employee to be furloughed. It was (initially) posed as a mechanism open to employers to prevent mass redundancies. Since then, the government has changed their tune and widened the use of the scheme to include any business that has been affected by coronavirus and the guidance has been extended to suggest that many categories of employees can be furloughed, including if they are shielding or have childcare difficulties, even if they were not at risk of redundancy. However, whether an employee should be furloughed is a business decision for the employer, and there is no entitlement for an employee to be furloughed if their employer still has, for example, plenty of work for them to do.
Nevertheless, employers should consider carefully any requests to be furloughed on the grounds of childcare difficulties etc. We have not yet seen how the Employment Tribunal will consider claims arising out of the CJRS or the overall impact of COVID-19, but we do know that the Tribunal always expects an employer to act reasonably.
Does an employee on furlough need to be paid the National Minimum Wage?
No, pay received whilst on furlough does not need to meet the National Minimum Wage unless the employee is undergoing training whilst on furlough. Entitlement to the National Minimum Wage is only for time spent actually working or training.
Do I have to top up the remaining 20% of salary?
No, but you should ensure that you receive agreement from any employees being paid less than 100% of their normal salary, as a reduction in their salary will almost always be a fundamental change to their terms and conditions of employment.
Some employers have chosen to top up the remaining 20% (or more) of salary. If you choose to do this, you should be aware that you cannot claim back any additional NI or pension contributions you make because you chose to top up, and you cannot claim any pension contributions about the mandatory employer minimum.
How should I deal with holiday entitlement?
Employees still accrue holidays whilst furloughed. They can be on holiday whilst also on furlough leave but they must be paid at their full rate for any time that they are on ‘holiday’. If the employee is furloughed at the time they are deemed to have taken their holidays then the employer can reclaim 80% (capped at £2500) of their pay during that period.
Subject to any contractual terms to the contrary, employees can and should be directed to take holidays to ensure there is not a build up on holidays to be taken by the whole workforce when everyone returns to work. If you are directing an employee to take holiday at a certain time, you should give them twice as much notice as the amount of holiday you need them to take.
Employment law experts
Aberdein Considine’s national employment law teams assists both individuals and businesses with employment legal matters.
Click here to get in touch or get in touch with the team directly using the links below:
- Sally-Anne Anderson, Partner, Edinburgh
- Karen Harvie, Senior Associate, Edinburgh
- Nicola Gray, Partner, Aberdeen
- Catriona Ramsay, Associate, Glasgow
Disclaimer: This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. Aberdein Considine is not responsible for any activity undertaken based on this information.