This blog seeks to provide answers to the common questions that employers have in respect of the furlough scheme. This blog has been updated to take into account the most recent extension of the furlough scheme announced in the 2021 Budget on 3 March 2021.

Please note that this blog is supplemental to our update “Furlough – How does it work” which explains (with helpful examples) on how employers can calculate pay for employees moving to a flexible furlough arrangement.

9 key questions on the flexible furlough and full furlough scheme answered

What is flexible furlough?

As the name suggests, flexible furlough is designed to give employers more flexibility in respect of their employees who are currently on furlough. Previously, furloughed employees were not allowed to undertake any work for their employer whilst they were on furlough. From 1st July, the flexible furlough scheme changed this rule, allowing for furloughed employees to work part time for their employer for a certain number of hours and remain furloughed for the rest. For example, an employer could decide to bring back an employee to work Mondays and Tuesdays (or 16 working hours) each week but keep the employee furloughed for the rest of the days (working hours) in each week.

Following the recent extension on 3 March 2021, it remains the case that employers can furlough their employees flexibly, or place them on full furlough.

How long can a flexible furlough or full furlough arrangement last?

After the 1 July 2020, there is no minimum furlough period, agreed flexible furlough or full furlough agreements can last any amount of time. Employers can enter into a flexible furlough or full furlough agreement more than once. However any claim for the furlough grant must be for a minimum of one week, so it is sensible to plan in blocks of weeks. This will also be helpful from a record keeping perspective.

How can I place an employee on flexible furlough or full furlough?

Employers will need to provide written confirmation to an employee of the flexible furlough arrangement they require an employee to undertake. This written confirmation should set out (at the very least) the basic details of the flexible furlough arrangement such as which hours the employee is now required to work and which hours an employee will remain furloughed. If you would like any assistance in preparing a flexible furlough letter please contact a member of the Employment team.

Employers must keep records of how many hours their employees work and the number of hours they are furloughed.  A written record of the agreement confirmed to employees must also be kept for five years.

How do I pay employees who are working part of their hours under the flexible furlough scheme?

Employees who are working on a flexible furlough basis are entitled to their full contractual pay for those hours that they work i.e. their rate of pay prior to being furloughed. This is subject to whether an employer and employee have mutually agreed (in writing) to change the contractual terms of the employee’s contract to reduce their pay and benefits.

As before, employers will still be able to claim for the remaining hours not worked through the grants available under the furlough scheme. However, employers will have to start contributing to the costs of the employees from July 2021 as the furlough scheme begins to taper until its conclusion in September 2021 as set out below.

How is holiday accrued whilst on flexible furlough?

It does not matter if an employee remains on full furlough or is partially furloughed. Holiday will accrue in the same way i.e. at the full rate of pay. This means, if a partially furloughed employee decides to take any of their furloughed hours as holiday, an employer will have to top up the employee’s pay to their full contractual rate for those hours.

Can I still have employees on full furlough?

Yes, there is no obligation for employers to make use of the flexible furlough option. Therefore, employers do not have to place any employees on a flexible furlough arrangement if they do not wish to. The furlough scheme runs until the end of September 2021 therefore, employers can keep employees on furlough up until this point.

However, they will have to contribute to the costs of any furloughed employees from July 2021 and bear all the costs of the employees once the scheme ends on 30 September 2021. For more details on this, please see my blog on the changes to employer contributions.

Can I still furlough employees?

Yes. Employers do not need to have previously claimed for an employee to be eligible to furlough them under the extended scheme.

For periods ending on or before 30 April 2021, employers can claim for employees who were employed on 30 October 2020, as long as they have made a PAYE Real Time Information submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.

For periods starting on or after 1 May 2021 employers can claim for employees who were employed on 2 March 2021, as long as they have already made a PAYE Real Time Information submission between 20 March 2020 and 2 March 2021.

Is there a maximum number of employees that can be furloughed?

No, you can furlough any number of employees and this is no longer limited to employees furloughed prior to 1 July 2020 in the way that previous versions of the scheme were.

What records do I have to keep?

The record keeping requirements are the same as before. Therefore you should keep, for 6 years, records of:

The government have provided an online furlough calculator. We would suggest you use this calculator to confirm your figures and for record keeping save a copy of the online calculator on to the employee’s personnel record.

Unless it is clear what hours are being worked from your ‘written agreement’, we are also recommending keeping a written record of hours or timesheet for staff and retaining this safely.

If you have any queries relating to the furlough scheme please contact a member of the employment team.

This blog was co written by Fred Chandler, Trainee.

SIGN UP to receive email notification when our dedicated “Coronavirus – Legal advice and guidance” page is updated as and when new/amended guidance is announced by government or other regulatory bodies.