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The UK Government has updated its guidance of the furlough scheme to include flexible furlough. But what is flexible furlough, and how will it work?
Flexible furlough is the term given to describe employees being brought back to work for part time, and being still supported by the furlough scheme the rest of the time.
So, from July 2020 a person who is full time can be brought back part time and furloughed for their remaining hours. The Government will still pay that employee a proportion of their furloughed hours. Wage caps are proportional to the hours an employee is furloughed so if, for instance, an employee is furloughed for 60% of their normal hours they will be entitled to pay of up to 60% of the £2,500 a month cap which applies to people who are furloughed full time.
Employers will have to pay for the hours that the employee works, and until August, the Government will pay 80% of wages up to a cap of £2500 for the hours the employee is on furlough as well as Employer National Insurance Contributions (ER NICs) and pension contributions for the furloughed hours.
From August, the same pay levels will remain, but employers will have to pay the ER NICs for the furloughed hours.
From September, the Government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for the time they are furloughed.
For October, when the scheme ends, the Government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for the time they are furloughed.
The minimum three week period for furlough has been removed, with the new scheme allowing flexible furlough to last amount of time, although there is a minimum claim period of seven calendar days.
Kate Palmer of HR experts Peninsula said: “The second ‘phase’ of the Job Retention Scheme is a marker for its gradual conclusion, which is expected at the end of October 2020. While some employers will be relieved that they are now permitted to meet growing demands from their customer base with a mixture of furlough, work and financial assistance from the government, the new scheme will not offer help to those who cannot yet open. Coupled with the introduction of employer contributions to wage costs, the impending end of the scheme will not be good news for all.”
Meanwhile, the Treasury Select Committee says the Treasury should move to help those who have fallen through the gaps in the UK government’s COVID-19 income support schemes, saying more than a million people have been unable to benefit from initiatives designed to support salaried employees and the self-employed. The committee identified five specific groups in need of greater support: those newly in employment; the newly self-employed; self-employed people with annual trading profits in excess of £50,000; directors of limited companies who take a large part of their income in dividends; and freelancers or those on short-term contracts.
The call came as the Chartered Management Institute [CMI] published a survey showing that 34% of managers at UK firms are set to make staff redundant due to the impact of coronavirus, with 26% saying the job cuts could come this year. The poll shows that 6% of companies expect to lay off more than 500 workers, while 18% will fire more than 100. The CMI analysis found that just 22% of managers expect their businesses to be back to normal by the end of the year.