On June 12, the United Kingdom (U.K.) government released detailed guidance on the new flexible furlough scheme, which will be introduced from July 1.
The new guidance provides clarity on the main workings of the new scheme and addresses some previously unanswered questions.
What Did We Already Know About the New Scheme?
We already knew that:
- Flexible furloughing would be introduced from July 1, meaning that from this date employees can work part-time while furloughed, something that is prohibited under the current scheme.
- From Aug. 1, employers will be required to contribute to the cost of the new scheme, starting with paying employee pension and national insurance contributions in August.
- June 10 was the cut-off date for furloughing an employee for the first time, in order to allow the currently required 21-day furlough period to be completed by June 30.
- From July 1, employers will be limited to furloughing no more than the maximum number of staff furloughed under the current scheme.
What Additional Detail Does the New Guidance Reveal?
The new guidance confirms that:
- From July 1, the current three-week minimum furlough period will be removed. There will be no minimum furlough period from July onwards, although for the purposes of claiming though the portal, employers will be limited to making one claim per week.
- Flexible furlough agreements can last any amount of time and employees can be flexibly furloughed more than once. In practical terms, this means employers can continue to rotate staff between furloughed and working status, if desired.
- A previously furloughed employee can commence a new period of furlough leave between June 11 and 30 (i.e., after the June 10 cut-off date). As any such new period of furlough leave will commence under the current scheme, the three-week minimum furlough period will continue to apply, regardless of whether this period ends before or after July 1. The guidance gives the example of a previously furloughed employee commencing a new period of furlough leave on June 22. In order to satisfy the current three-week requirement, he or she would have to remain furloughed until at least July 12. After this point, he or she can be flexibly furloughed under the new scheme.
- Where an employee was on statutory family leave, such as maternity or paternity leave, on June 10, he or she can be furloughed for the first time after the usual cut-off date, as long as the employer had used the scheme with respect to other staff by June 10.
The updated guidance contains several worked calculations to show how pay should be calculated under the new scheme, depending on the individual’s circumstances:
- Broadly, it will be necessary to calculate the employee’s usual working hours, and then work out as a proportion of these, his or her hours spent furloughed, and his or her hours spent working.
- The calculations employers will be required to carry out will differ depending on whether the employee usually works fixed or variable hours.
- Staff should be paid in full for any hours they work while flexibly furloughed and the employer will be responsible for paying this element themselves.
- The employer will then be permitted to claim under the new scheme for time spent furloughed.
- The usual caps will continue to apply, and from Aug. 1 until the new scheme closes on Oct. 31. The government grant will reduce as employer contributions increase. Furloughed staff will continue to be entitled to 80 percent of normal pay subject to the cap of 2,500 pounds (approximately $3,089).
Jessica Scott-Dye is an attorney with VWV in Bristol, U.K. © 2020 VWV. All rights reserved. Reposted with permission of Lexology.
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