Employment Advice – Flexible Furlough & Other Developments

Flexible Furlough

At the start of this month (July), the concept of Flexible Furlough came into play, which has moved the Job Retention Scheme away from purely being an “all or nothing” scheme. It being possible now to bring staff back, for a certain amount of hours, while still being able to claim reimbursement for the hours not being worked.

Some relevant dates, as well as the tapering of certain employer contributions, are included below.

  • From 1 July – Employers have been able to bring staff back, on adjusted times/hours and work pattern, while still being able to claim (80%) relevant wage reimbursements for hours not being worked.
  • From 1 August – Employers can still claim the same 80% wage reimbursements (subject to the £2,500 cap), for relevant hours not being worked, but they will take over payment of employer NICs and employer pension contributions.
  • From 1 September – Employers can still claim for 70% wage reimbursements (subject to an adjusted £2,187.50 cap), for relevant hours not being worked, but they will have to pay employer NICs, employer pension contributions and 10% of wages.
  • From 1 October – Employers can still claim for 60% wage reimbursements (subject to an adjusted £1,875 cap), for relevant hours not being worked, but they will have to pay employer NICs, employer pension contributions and 20% of wages.*

It should be noted that there is no requirement to use Flexible Furlough and any existing Furlough arrangements (ie; “full Furlough”) can maintain. However, the UK Chancellor has reiterated that the intention is to close the Furlough Scheme, at the end of October, and contributions are required from 1 August.

If you are seeking to utilise Flexible Furlough, Guidance notes there should be written agreement and a record kept, for 5 years. Although it is not clear whether this is deliberate, this goes slightly further than the stated requirements for people being placed on full Furlough (where simple written notification, was referred to). As with full Furlough, this is perhaps the area of most legal sensitivity and you should take advice on the effective drafting of Flexible Furlough Agreements. It would seem possible to vary such arrangements (subject to agreement) on a week to week basis and it would also be open to agree restrictions to pay (e.g; to 80% or 90%), for such hours worked.

Again, similarly to full Furlough, there may also be legal sensitivities surrounding the appropriate selection of staff, to move onto Flexible Furlough. This may, for example, include any arguable discrimination risks and possible prejudice arguments, relevant to any later redundancy exercise.

*The guidance surrounding making relevant reimbursement claims can be complex, and has been changing (including to take account of Flexible Furlough), so you should ensure you receive any necessary accounting/payroll advice. One interesting date to note (for example) is that 31 July would seem the last date you can submit relevant claims, for the period ending 30 June.

Job Retention Bonus

Although we await further detail, the UK Chancellor also recently announced that businesses could be eligible for a £1,000 bonus. This will apply for each previously furloughed staff member who remains employed, at the end of January 2022. Such staff will require to have earned at least £520 per month (gross) across November, December and January.

While this initial announcement has been met with scepticism in some quarters, this could be sufficient incentive for certain employers to retain staff. Much may though depend on factors including; the industry you operate in, how badly you have been (and may continue to be) affected and the overall make-up of your staff group. It also remains to be seen whether there will be eligibility, in respect of any previously furloughed staff member (including – for example – ones that were only furloughed for a short period).

Possible Redundancies/Restructuring

For many businesses, unfortunately, Flexible Furlough may not be enough, on its own, to weather the coronavirus storm. For those more seriously affected, redundancies (or a restructuring/change to terms and conditions exercise) may already be in serious contemplation. Needless to say, redundancy is a very technical area and specialist advice would always be recommended when considering any such option(s).

If you require any advice on Flexible Furlough, or surrounding any possible redundancy/restructuring exercise, then our Euan Smith would be happy to assist – 07741908566 or euan.smith@macandmac.co.uk.  

We also offer flexibility surrounding fees, for all business clients, which may include the option of a fixed fee monthly retainer.

July 20, 2020