What is flexible furloughing?
Flexible furloughing is an extension to furlough arrangements that allows employees to work any time / shift pattern. As an Employer you can still reclaim furlough pay for normal hours not worked.
When does it start?
1st July 2020.
Who’s eligible for flexible furlough?
Any employee that has completed a 3-week furlough period and has had a successful reclaim via the job retention scheme. The includes employees who have previously been furloughed but are not currently on furlough.
An employee who did not start furlough prior to 10th June will not be eligible for the job retention scheme grant. There is an extension to these criteria if an employee is returning from statutory parental leave.
How do you reclaim the cost of flexible furlough?
Through the JRS (Job Retention Scheme) using online services (or via your agent). The reclaim process is similar to previous furlough reclaim process but there are a few changes;
- Claims can no longer cross over a calendar month. This means you might have to process two separate reclaims for a single pay period.
- The minimum reclaim period is reduced from 3 weeks to 7 days. You can also process a reclaim for less than 7 days is the reclaim period falls at either the start or end of a calendar month.
- You will still be able to reclaim 14 days in advance of the end of your reclaim period but claims starting from 1st July will only be able to completed from 1st July onwards.
- If you are using flexible furlough you will also need to report the normal working hours and furloughed hours during the reclaim period.
What can you reclaim?
You can reclaim the cost of furlough while employees on a flexible furlough agreement are not working. From August employers will be required to contribute towards some of the furlough costs as previously announced.
How do you calculate the reclaim?
The furlough payment will be calculated as follows;
Step 1 – Calculate the furlough payment for the pay period as if the worker was furloughed for the whole pay period
Step 2 – Divide this by the number of normal working hours in a pay period. This is either contracted hours or the higher of 2019-20 average working hours or the hours worked during the equivalent dates last tax year.
Step 3 – Multiply by the number of furloughed hours. This is calculated by taking the number of hours worked in the pay period from the normal working hours in the pay period.
Jane is on flexible furlough for July and is due to be paid for the pay period 1st July – 31st July. She is contracted to 40 hours per week and has a flexible furlough agreement to work Monday and Wednesday each week for a total of 8 hours per day during July. Her salary prior to 19th March was £2200.
Step 1 – Her furlough payment for July if she had been furloughed for the full pay period would be 80% x £2200 = £1760.
Step 2 – Jane is contracted to 40 hours per week so her normal working hours for July would be 40hours divided by 7 days in a weekly period multiplied by 31 calendar days in July = 178 (this number is always rounded up to the next whole number).
Step 3 – Multiply by the number of furlough hours. Jane worked 9 x 8 hours days in July = 72 hours. We deduct this from the 178 working hours in July to give us 106 furlough hours.
So the calculation for Jane’s furlough payment is;
£2200 / 178 x 106 = £1310.11.
Jane will need to be paid her usual hourly rate for the hours worked.
You can then reclaim the furlough pay and associated employers national insurance and employers minimum auto-enrolment pension contributions using the usual calculation process. (Remember not to reclaim the Employers National Insurance is you are claiming the Employment Allowance).
From August you will only be able to reclaim the furlough payment.
From September employers are required to cover some of the furlough payment. Here you will need to divide the furlough payment by 80 and multiply by 70 or 60 for September and October reclaims respectively.
If you need further guidance around flexible furlough join our free webinar.