Flexible furlough – what manufacturers need to know

Posted on 30 Jun 2020 by Jonny Williamson

Many businesses will welcome the introduction of new 'flexible furlough' arrangements from 1 July, which offer financial and operational benefits, but there are areas where employers must take particular care.

What is flexible furlough?

Under the original Coronavirus Job Retention Scheme (CJRS), employees on ‘furlough’ remained employed, receiving 80% of their regular pay, up to a cap of £2,500 per month (which employers could claim back from the government), but they could not perform any work for their employer.

From 1 July 2020, employers can agree to bring furloughed employees back to work part-time on ‘flexible furlough’ and they will be responsible for paying employees’ wages while they are working.

Government support will only cover non-working hours and will gradually taper down as the scheme draws to a close, which is expected to be on 31 October.

Make UK’s top tips for navigating the new flexible furlough scheme

Getting the numbers right:  Subject to a few exceptions, the number of employees that can be flexibly furloughed is limited to the maximum number claimed for in a claim period under the original Scheme. Bear in mind, if the workforce currently rotates on and off furlough, not everybody will be able to come back on flexible furlough at the same time.

Picking the right people: Only employees who have already completed at least three weeks of furlough on or before 30 June (with some limited exceptions), can be flexibly furloughed after 1 July. HR also need to take care to avoid discrimination when selecting employees for flexible furlough.

Working out the hours: Calculating employees’ usual working hours for the purpose of claims requires careful attention. Different formulae apply depending on whether employees work fixed or variable hours and whether their pay varies according to their hours.   

Reaching agreement: Flexible furlough should be agreed and not imposed on employees. If the workforce is unionised, this may be done via collective agreement. Flexible furlough agreements need careful drafting to ensure that the arrangement works effectively.

Timing of claims: Businesses will need to choose an appropriate claim period to make the best use of the financial support available for flexible furlough and implement a robust calendar alert system to ensure claims are submitted at the right time.

Balancing the budget:  Claims will only cover flexibly furloughed employees’ non-working hours and the monthly cap on furlough pay will be proportional to the hours not worked. Does the budget balance? In addition, the level of Government support will gradually decrease from 1 August. 

To help guide businesses, Make UK has created a free new letter template, to help employers agree flexible furlough with employees as they move towards recovery.

Further resources are available in Make UK’s Furlough Letters and Resources Pack, designed to help businesses assess risk, put in place strategies to restart and maintain effective production, and assist HR in ensuring as smooth a return as possible to ‘business-as-usual’.