Make UK, the manufacturers’ organisation, welcomes the introduction of new ‘flexible furlough’ arrangements from 1 July, which offer financial and operational benefits, but highlights areas where employers must take particular care.
To guide them on their way, Make UK has created a free new letter template, to help employers agree flexible furlough with employees as they move towards recovery.
“Flexibility is helpful, but implementing new flexible furlough arrangements, which allow employees to return to work on a part-time basis, will not necessarily be straightforward.” says Sara Meyer, Principal Legal Adviser at Make UK.
“Make UK’s legal and HR experts have been tracking the furlough scheme since its inception, guiding employers through its complexities on a daily basis. Our original furlough letter template has been downloaded over 125,000 times and our advisers have answered more than 10,000 COVID-19 related calls.”
The Make UK policy team are in constant communication with the Government, enabling it to represent employers’ views and make a genuine difference to how they get back to business. This has included successfully lobbying for the introduction of flexibility into the furlough scheme.
What is flexible furlough?
Under the original Coronavirus Job Retention Scheme (the ‘Scheme’) 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.
Here are 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.
In addition to the latest flexible furlough letter, 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”.