26 June 2020, 11:17 AM
  • We look at how the new short-term scheme will affect small businesses
What does the flexible furlough scheme mean for you?

In an effort to accommodate part-time return for employees as well as contribution requirements for employers, the UK Government’s original furlough scheme is set to be replaced with a more flexible version, which will come into effect on 1st July.

The new scheme comes as businesses begin to reopen and the Government’s wage support schemes start to taper off to help the economy bounce back.

The original furlough scheme was put in place in March in an effort to protect employees from being laid off and businesses being forced to shut down. It’s part of the UK’s wider Coronavirus Job Retention Scheme (CJRS) which launched in April. Knowing the scheme could not continue indefinitely, the Government has sought to continue to offer support as the country returns to normality post-lockdown.

What is flexible furlough?
Changes are being made to the scheme in phases in an effort to encourage employees to bring back workers and avoid redundancies. It’s hoped the move will particularly help small businesses.

The new short-term furlough scheme means that as of 1st July, employers can begin to bring furloughed employees back to work for any amount of time and any shift pattern, while still claiming CJRS grant for the hours those employees don’t work. To qualify, employers must already have been enrolled in the scheme for at least three weeks. This means employees can agree to work part-time, being paid by their employer on days worked, and receiving furlough pay from the Government for the remaining days.

Employees on furlough will continue to receive 80 percent of their salary, up to £2,500 per month, all the way up to 31st October, 2020.

What does this mean for SMEs?
As of August, employers will have to start making more contributions. Businesses will need to start paying National Insurance and tax contributions for staff, as well as paying 10 percent of furloughed wages in September, followed by 20 percent in October, while the Government continues to pay the remainder of wages.

The scheme is also closed to new applicants, with the exception of those who may be returning from a period of parental leave or statutory sick-pay. This also means that the number of employees a business can claim for as of 1st July cannot exceed the maximum number of employees it has claimed for in any previous claims before 30th June.

The three-week rule, whereby employees could only be furloughed in three-week blocks, has also been amended, allowing employers to furlough staff for as little as seven days.

Employees hoping to place workers on flexible furlough will need to set out a new written agreement for their employees. This can last for any amount of time, and will help businesses to manage staffing requirements on a weekly and monthly basis.

Self-employed workers across the country will also be able to access a second lump sum of cash from the Government to cover lost income. The grant will amount to 70% of a self-employed person’s average monthly trading profits to cover three months’ worth of income, capped at £6,570.

Those looking to find out more about the job retention scheme and make claims can visit the Government portal here.

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