An overview of the most frequently asked questions regarding phase two of the Coronavirus Job Retention Scheme which comes into effect on 1 July 2020, replacing the current Job Retention Scheme which ends on 30 June 2020.

When does flexible furlough start? 

From 1 July 2020 employers can bring back to work employees that have been previously furloughed for a full consecutive 3-week period prior to 30 June 2020.

Do employers and employees have to follow a set pattern of work?

No. The exact working pattern can be agreed between an employer and an employee and it seems that there will be no minimum/maximum requirement to continue qualifying for the scheme. 

Is flexible furlough compulsory?

No. Employers are not required to bring back employees part-time. Employers can keep staff at home, not working at all, if they wish. These employers will continue to benefit from the scheme but will need to begin to make contributions to furlough pay for days not worked, as highlighted above.

What is the last day that employees can be placed on furlough?

The cut-off date is 30 June 2020. Employees must have been on furlough for 3 consecutive weeks at any time between 1 March 2020 and 30 June 2020. This means that the latest date an employee could have been placed on furlough for the first time was the 10 June 2020. Pay for employees who are placed on furlough for the first time after this date will not qualify for any grant under the CJRS. 

If employees have previously been placed on and off furlough for 3 week periods (under a ‘rotating furlough’ arrangement), our understanding is that they can be placed on furlough again after 10 June 2020. But employees cannot be placed on furlough for the first time after 10 June 2020, as they will not have completed the required minimum 3 week period. Any full-time furlough period that commenced on or before 30 June must last for a minimum of 3 consecutive weeks, even if this runs beyond 1 July. After that 3 week period, the employee would become eligible for the new flexible furlough scheme.

How will employees be paid?

The amount that employees are entitled to be paid for days/hours worked will be as per their contract. Employers will be responsible for paying NICs and tax on these amounts. It seems that employers who have implemented a pay cut across the board for employees who were not furloughed, may also be able to agree a variation to the contract of furloughed employees so that their part-time rate is reduced accordingly. As with any variation, an employee will have to agree to the change, but this is likely to be accepted if the alternative is redundancy. 

Do we need to enter into new agreements?

Furlough agreements under the original CJRS should state that employees are not permitted to carry out any work for their employer whilst on furlough.  Employers will therefore need to reach new agreements with employees if bringing employees back to work part-time. 
Written agreements for flexible furlough arrangements, incorporated into employees’ contracts, are not strictly necessary. However, this is best practice and strongly recommended. As a bare minimum, verbal agreements must be reached with employees and these must be recorded in writing. 

What will the cost be for employers?

This will be a gradual shift, starting with the requirement to pay NICs and pension contributions, then 10% from September, and by October paying 20% of furlough pay:

Government contribution: employer NICs and pension contributionsYesNoNoNo
Government contribution: wages *80% up to £2,50080% up to £2,50070% up to £2,187.5060% up to £1,875
Employer contribution: employer NICs and pension contributionsNoYesYesYes
Employer contribution: wages--10% up to £312.5020% up to £625.00
Employee receives80% up to £2,500 per month80% up to £2,500 per month80% up to £2,500 per month80% up to £2,500 per month

* Wage caps are proportional to the hours not worked.

The scheme will close on 31 October 2020 subject to any further extension.