Flexible furlough – Third Treasury Direction on the UK Coronavirus Job Retention Scheme



The Chancellor issued a further Treasury Direction in relation to the Coronavirus Job Retention Scheme (CJRS) on 25 June 2020 to include details of the flexible furlough scheme. The full Direction can be read here.

Flexible furlough

From 1 July to 31 October, employers are permitted to use the CJRS flexibly. This means the scheme enables part-work/part-furlough. Employers can claim under the scheme for time furloughed and will have to pay employees normally for time spent working.

Employers can only use the furlough scheme for an employee after 1 July if that employee was previously furloughed for at least three consecutive weeks before 30 June. 

Further, from 1 July, employers cannot claim for more employees in a single claim than the maximum number claimed for in any period up to 30 June. This means if you made three claims between March and June for 50, 40 and 70 employees, the maximum number of employees you can claim for in any single claim starting on or after 1 July is 70 employees. That applies even if you have furloughed 160 individuals since March.

There are exceptions to this restriction on "new" furloughs where an employee is returning from family leave or is an armed forces reservist.

The financial support for employers will not change until 1 August 2020. From 1 August, employers will have to meet the cost of employer NICs and pension contributions. A contribution to employees' furlough wages will have to be made by employers from 1 September.

Reaching an agreement

There is scope to agree any pattern of flexible furlough and for any length of time until the scheme ends on 31 October. Personal circumstances of an employee may be a factor in considering working patterns, such as childcare or other caring commitments, or avoiding rush hour commutes.

The agreement must be made before the period of flexible furlough begins. The Direction clarifies that, once agreement is reached, it should be made or confirmed in writing. This can include an electronic record, such as email. The employer should retain a record of the agreement until at least 30 June 2025.The agreement should set out the main terms of the flexible furlough. In particular, it should specify the details of the agreed working arrangement, including when the employee will work and when they will be on furlough. This will be important, both for claims under the CJRS and in case of later disagreement with the employee.

Making a claim

Any claim in respect of the period before 30 June must be made by 31 July 2020.

From 1 July, the scheme is changing from month to month. Although more than one claim can be made in a month, a claim must start and end within the same calendar month and must relate to seven or more consecutive days. An exception to the seven-day claim period is made for "orphan periods" at the beginning or end of a month.

Calculating wages

The Direction provides various examples of how to calculate employee wages based on usual hours and hours worked, to determine how much can be claimed under the CJRS.

The requirements are not straightforward and will have to be worked through carefully especially if the claim period does not align with a calendar month. To align with a calendar month, a furlough period may have to start mid-week. In all other cases (for example, if a furlough period started on Monday 6 July), the complex flexible furlough calculations will have to be undertaken. The government has worked through some examples and has updated its calculator on the gov.uk website to assist with hours calculations to claim the CJRS grant.

If you are considering bringing back your workforce part-time, we recommend you start planning and discussing with employees as soon as possible. Bear in mind that some employees will have childcare issues and others may be shielding, or live with someone who is shielding. The government expects employers to be understanding and flexible with employees in these situations.

Please refer to our previous post on flexible furlough for more details.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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