We bring you the latest updates on policy and guidance that we have gathered this past month to keep you updated.

Wednesday 17th June at 10am Mica Bristow and Katie Linstead in collaboration with Croner HR held a webinar on the CJRS changes and guidance with a live Q&A!

What is flexible furlough?

From 1 July 2020, furloughed staff will be able to be brought back to work on a part-time basis.

Previously, staff placed on furlough have been able to do no work for the company or an associated organisation if the company wished to claim 80% of their wages from the government.

However, flexible furlough means that they can now be brought back to work, part-time, and the company can still claim the grant.

This means that employers will still be able to claim the furlough grant for the hours their flexibly furloughed employees do not work, compared to the hours they would normally have worked in that period.

Who does the scheme apply to?

From 1 July 2020, only employees that their employer has previously successfully claimed a previous grant for will be eligible for more grants under the scheme.

This means they must have previously been furloughed for at least 3 consecutive weeks taking place any time between 1 March and 30 June 2020.

For the minimum 3 consecutive week period to be completed by 30 June, the last day an employee could have started furlough for the first time was 10 June.

This does not apply to staff returning from maternity, paternity, adoption, shared parental or parental bereavement leave – they can still be placed on furlough even if they have not been furloughed before.

Employers should have a discussion with employees who they wish to place on the flexible furlough scheme because they will need to agree the arrangements of their part time work.

The agreement should be confirmed in writing and employers must keep a written record of the agreement for five years.

Employers do not need to place all their employees on furlough. In addition, they can continue to fully furlough employees if they wish.

This means that furloughed employees do not have to be brought back part-time; it is up to employers.

Length of flexible furlough

Flexible furlough agreements can last any amount of time. This means that they do not need to last for a minimum of 3 weeks.

However, the period that employers claim for must be for a minimum period of 7 calendar days.

Employees can enter into a flexible furlough agreement more than once.

The pay element

Currently, employers need to pay furloughed employees at least 80% of their usual monthly earnings, up to a maximum of £2,500.

The government then reimbursed employers through the scheme, including providing employer contributions to National Insurance and pension.

Employers claimed for a minimum of 3 weeks and were able choose to pay employees more than the grant - but they did not have to.

Employees still paid Income Tax, National Insurance contributions and any other deductions from wages.

This is going to change going forward.

Paying staff on flexible furlough

From 1 July, employers will pay the employee for the hours they work, along with national insurance contributions and pension contributions for those hours.

The scheme will allow employers to recover the remainder of wages to a maximum cap.

Wage caps are proportional to the hours an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours.

Claims under the new scheme will be open from 1 July 2020.

When claiming for employees who are flexibly furloughed employers should not claim until they are sure of the exact number of hours they will have worked during the claim period.

This means that employers should claim when they have certainty about the number of hours their employees are working during the claim period.

If employers claim in advance and their employee works for more hours than they have told HMRC about, then they will have to pay some of the grant back to HMRC.

Government contributions to the scheme

From 1 August, employers will need to start paying pension and National Insurance contributions for the time furloughed staff are not working.

From 1 September, employers will need to start contributing 10% of the 80% grant given to furloughed workers.

From 1 October, employers will need to start contributing 20%.

The scheme will close in its entirety at the end of October.

National living wage/National minimum wage

Pay when on furlough does not have to meet NMW/NLW because these rates are only payable for hours worked.
However, furloughed workers who return part-time will need to be paid at their usual rate by their employer, which must not dip below the NMW/NLW.

Keeping records

Employers need to keep records of how many hours their employees work and the number of hours they are furloughed during flexible furlough.

For example, employers will need to record that an employee who normally works for 37 hours a week is actually working for 15 hours and is furloughed for 22 hours.

Working during flexible furlough

During flexible furlough, employees are not allowed to do any work for employers or any linked or associated organisation during the periods that they are recorded as being on furlough.

Employees on flexible furlough can do training during the hours that they are recorded as being on furlough, but must be paid at least national minimum wage for those hours.

Calculating working hours

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

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

Employers should work out usual hours for employees who work variable hours, if either:

  • their employee is not contracted to a fixed number of hours
  • their employee’s pay depends on the number of hours they work.

Where the employee’s working hours are fixed, or their pay does not vary with the amount of hours worked, the reference period for calculating their usual hours is the hours they contracted for at the end of the last pay period ending on or before 19 March 2020.

Where an employee works variable hours, employers will use the higher of:

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

Maternity considerations

Employees on maternity leave could be furloughed provided they were receiving at least 80% pay during leave. Those receiving statutory maternity pay (SMP) could not be furloughed due to not being in receipt of 80% pay, and SMP is recoverable through existing means in any case.

The 10 June cut off date does not apply to those on maternity, paternity, adoption, shared parental, parental bereavement leave. They can be furloughed for the first time on their return provided the employers has previously furloughed other employees.

If employees about to go on maternity leave has seen their earnings reduce due to a period on furlough or statutory sick pay prior to their Maternity Leave starting, their normal pay should be used to calculate SMP.

The same principle applies to contractual adoption pay, paternity pay and shared parental pay.

Holidays and furlough

Annual leave can be taken at the same time as furlough but the employer must top up payment for holiday to 100%.

If employees usually take bank holidays as a holiday then employers with either have to top up to 100% or give a day off in lieu.

Employers can have a rule that there is no annual leave to be taken during furlough.  It is now possible to carry four weeks of leave to the next two holiday years if not reasonably practicable to take due to coronavirus.

Employee can request leave while on furlough.  This can be refused as normal.

Education/Early Years/Children’s social care sectors

Extra conditions have been put in place which may restrict employers in these sectors from using the scheme, whether full furlough or flexible furlough.

Government expects all relevant organisations to consider options to reduce operating costs and secure commercial loans before utilising the Scheme.

Educational settings that are in receipt of some public funding should only furlough employees in certain circumstances.

How to make a claim

The Online Portal to make a claim became available on 20 April 2020.

Employers should make claim in accordance with actual payroll amounts at the point at which payroll is run or in advance of an imminent payroll.

Employers must pay the employee all the grant they receive for their gross pay, no fees can be charged from the money that is granted.

This will be the same when applying for flexible furlough wages.

The Portal

There is a step by step guide on the coronavirus job retention scheme available from the Government online.

You will need your Government Gateway ID to log in.

Please note that there is now a save and return option should you need to take a break or come back to your claim later

Once submitted you will see the claim confirmation number. This will not be e-mailed to you so ensure you print or make a note of the number.

Calculations should be retained as HMRC may request these.

Claims will be processed and paid within 6 days.

Payroll Calculations

For fixed hours workers you would need to take the weekly contractual hours, divide this by 7 and multiply by the number of days in the calendar month you are processing to get your “usual hours”.

Employee works 40 hours a week (fixed contractually) for £2000 pcm. The employee was furloughed from 1st May and is now flexibly furloughed from 1st July on 25 hours per week.

The number of usual hours for the month of July = 40 / 7 * 31 = 178 (round up to nearest whole number)

Number of actual working hours in July = 108

Number of furlough hours = 178 – 108 = 70 hours

Both sets of hours calculations need to be kept in your records, and the actual working hours must be reported on the payroll and payslip.

Employee’s maximum furlough wage = 2000 * 80% = £1600

Flexible furlough pay = £1600 * 70 / 178 = £629.21

As the claim is for July the employer can claim the full furlough amount in their grant, but in later months this would need to be pro-rata’d further before you claim.

Two final points to remember:

  • Your relevant ERNIC and ER Pension for July will need to be pro-rata for any flexible furlough before you make a claim
  • From July you can only make claims within single calendar months but you can have small claim periods – for example you cannot make a claim for an earnings period that runs 6th of July to 5th of August, due to the changing claim guidelines, you would have to calculate a claim up to the 31st of July (i.e. including ERNIC and ER Pen), then from 1st August to 5th August (without ERNIC and ER Pen) would go into your full August claim.

Protect yourself from scams

Stay vigilant about scams, which may mimic government messages as a way of appearing authentic and unthreatening. Search 'scams' on GOV‌.‌‌UK for information on how to recognise genuine HMRC contact. You can also forward suspicious emails claiming to be from HMRC to phishing@hmrc.gov.uk and texts to 60599.


Pay Check survey

And finally, we are trying to gather as much information from our clients as possible in order to serve them best - if you have 30 seconds we would really appreciate you completing this super quick survey on your intentions over the next few weeks


The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our COVID-19 Update page.


Updated: 25 June 2020

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