From 1 July, the new flexi-furlough scheme opens.
Under the scheme, employees can come back to work for any amount of time, and employers can still claim the furlough grant for the time they do not work, and pay staff 80% of their wages for this time.
How does this work in practice?
From 1 July, employees can do any number of hours under flexible working. Their pay for this will be based on their hourly rate. Where employees have a fixed salary, this will be calculated by dividing their annual salary by their contracted hours.
The employer will pay their staff 100% for the hours worked, and for furloughed hours – they will pay a minimum of 80% of their hourly rate, subject to a daily maximum. The maximum amount is the £2500 cap per month as before, divided by the number of calendar days in the month (so £80.65 for July, Aug and Oct – and £83.34 per day for Sept!)
The employers will then claim back the 80% from HMRC as before, though there is a requirement to put different information onto the claim form as we are now looking at hours worked/not worked per month per employee.
No claims can be made for this until 1 July, and claims have to be made covering at least a week at a time. In practice, this will still be done (by me anyway) monthly, the week before payrolls are due to be done to ensure funds are received in time to pay staff.
What are the other changes to the Furlough scheme?
The scheme will close on 31 October and is being phased out over 3 months.
For June and July – there are no changes to the grant levels
For August – HMRC will cover 80% of the gross wage only and employers will be responsible for the employers NIC and any employer pension contributions. For a lot of small businesses, they will not have any employers NIC or pension contributions due in August, so they will see no difference in the amount they can claim.
For September – the amount the government will cover reduces to 70% of wages up to a cap of £2,187.50. The employee will need to top up wages to ensure that the employee still receives at least 80% of their salary whilst on furlough.
For October – the government contribution reduces to 60% (up to the cap of £1,875), with the employer contributing 20%
Other Points to Note
31 July is the last day that you can claim for periods ending on or before 30 June.
Only employees who had been furloughed for any 3 weeks in the period ended 30 June are eligible for flexi-furlough, so you can’t put an employee on flexi-furlough who has previously been working their normal hours throughout the lockdown period.
The flexi-furlough work patterns will again need to be discussed and agreed with employees, and a written agreement that confirms the furlough agreement should be signed by both parties and kept on file.
If you need help dealing with the HR side of furloughing/flexi-furloughing/bringing staff back to work or even making redundancies, then we would recommend that you contact Louise Lithgow-Dicker at Go HR for tailored advice.
For any queries on the new rules, or the government business support packages in place, then please contact Rosie at firstname.lastname@example.org