Flexible furlough scheme
Q: What changes have been made to the extended Coronavirus job retention scheme?
The key changes to the extended Coronavirus job retention (or flexible furlough) scheme are:
- From 1 July the employer and employee can operate new arrangements where employees are partly furloughed and partly return to work.
- In June and July, the Government continued to pay furlough grants for the hours not worked by furloughed employees (ie 80% of wages, capped at £2,500).
- From July onwards employers are required to pay normal salary for any hours worked by employees.
- From August employers have to pay employers’ NI and relevant pension contributions on furlough pay or salary regardless of whether the employee is fully or partly furloughed.
- In September and October employers will be required to contribute at least 10% and 20% respectively towards employees’ furlough pay so that the cap on the part of the grant paid reduces before the scheme ends in October.
Although employer contributions have now increased (from 1 August onwards) employees’ income should not fall below the 80% figure subject to the cap. The Government will therefore continue to contribute towards any non-working time of furloughed staff until the end of October.
From July onwards claim periods must be limited to a calendar month to fit in with the changing level of grant; overlapping months will only be permitted before July. Employers do not have to end an employer's furlough period and re-start it each month from July onwards; it is the claim period and not the furlough period that must fit in with the monthly criteria. For further detail see our FAQ on whether employers have to end furlough and re-start it each month from July onwards.
The period claimed for needs to be for at least three weeks before July and at least one week afterwards, although monthly or fortnightly pay periods can be used.
The extended furlough agreements must be confirmed in writing. For employees who already have written furlough agreements there will be no need for a new furlough agreement in order to transition into flexible furlough. However, the employer should check the wording of the agreement and may need to agree the hours or days which the employee is now going to work during the furlough period. Employers must also report the hours employees have worked compared to the hours the employee would usually work. The grant claim will be based on the percentage of hours not worked and between July and October the grant cap will be proportional to the hours not worked.
Those employees with caring responsibilities or who are shielding because they are highly clinically vulnerable who were previously furloughed can continue to be furloughed from 1 July.
A similar longer period of government support applies to the Self-Employment Income Support Scheme. For further details see our FAQs on the support available for the self-employed. More information is also available in our furlough guide.
Q: If employers have furloughed staff but do not want to pay the additional costs from August onwards, can they ask employees to agree to forego the extra amount in return for receiving the furlough pay?
If employers have furloughed staff, they now have to pay the additional costs. Employees are effectively guaranteed 80% during furlough subject to the financial cap. There was no change to the level of financial assistance provided by the Government during June and July but now employers must contribute and the Government will pay the following percentages:
- August: 80% of wages up to a cap of £2,500 but employers will pay employer NI and pension contributions for the hours the employee does not work.
- September: 70% of wages up to a cap of £2,187.50 for the hours the employee does not work. Employers will pay employer NI and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.
- October: 60% of wages up to a cap of £1,875 for the hours the employee does not work. Employers will also pay employer NI and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.
The furlough scheme guidance does not overtly address what happens if employers do not pay the supplement or ask employees to agree to forgo the extra amounts in return for receiving the furlough grant. As employees should receive the overall 80% figure they will not do so if the employer does not supplement it. At the very least the employees would have a claim for breach of contract to obtain the full amount and there may also be an offence committed against HMRC. Government guidance does emphasise that on average employers are being asked to contribute 5% of the overall cost in August, 14% in September and 23% in October which is far less than the pre-furlough salaries.
Employers usually have a high degree of freedom to agree to vary employment contracts with employees, but the fact that employees must receive the 80% in full without any deductions is a statutory requirement. If employers decide they are not able to pay these amounts they may start a redundancy process if there is insufficient work and the employer expects that work is unlikely to return to previous levels for a considerable time. The overall cost of making redundancies and redundancy payments will be higher than the above percentages of furlough salaries for three months. Therefore, if employers make redundancy decisions this is more likely to be based on predictions about future. For employers contemplating redundancies and potential alternatives see the redundancy during COVID-19 guide for more information.
Q: What are the main dates for the extended furlough scheme changes?
The main dates for the changes to the extended Coronavirus job retention or flexible furlough scheme are:
- 10 June: Any employees being furloughed for the first time should have been placed on furlough by this date for a minimum period of three weeks.
- 30 June: The furlough scheme closes to new applicants.
- 1 July: The new flexible furlough scheme started for employers who have furloughed these employees previously. Furloughed employees can be partly furloughed and partly working from home or in the workplace and the grant can be claimed for the hours not worked.
- 13 July: Applications for grant under the first self-employed income support scheme close.
- 31 July: Final date for employers to make claims for the period to 30 June 2020.
- 1 August: The level of the grant employers can claim from the Government begins to progressively reduce. Although 80% of furloughed employees’ wages can still be claimed up to a cap of £2,500 for hours not worked, employers must pay employer NICs and pension contributions even if the employee is fully furloughed. The ability to reclaim these items ends. Employers must pay employees for hours worked, plus NI and pension payments in the usual way.
- 1 September: The amount of Government grant that can be claimed reduces to 70% of wages, subject to a cap of £2,187.50, for the hours that the employee does not work. The employer must pay 10% to make up the shortfall and ensure the employee still receives the 80% up to a cap of £2,500 plus employers’ NI and pension contributions.
- 1 October: The amount of Government grant that can be claimed reduces to 60% of wages, subject to a cap of £1,875 for the hours the employee does not work. The employer must now pay 20% to make up the shortfall and ensure the employee still receives the 80% up to a cap of £2,500 plus employers’ NI and pension contributions.
Q: What should employers do if opting for flexible furlough because a full return to work is not possible?
- Involve ensure employees (or union representatives).
- Agree flexible working hours or patterns and keep agreements and records.
- Select who will be flexibly furlough, avoiding all forms of discrimination especially sex, age and disability.
- Inform relevant employees that they are on flexible furlough leave and keep a written record that confirms the flexible furlough arrangement.
- Decide on the length of the claim period, what to include when calculating wages and employees’ usual hours and furloughed hours.
- Plan for what will happen when the furlough scheme ends on 31 October.
Q: Under the extended furlough scheme does a staff member actually have to be on furlough leave as at 30th June to qualify, or does it count if they have previously been furloughed but are working on a staff rotation?
The extended or flexible furlough scheme can include all employees who have previously been furloughed with that employer, even if they are working on 30 June (for example on a staff rotation).
Under the furlough scheme (also called the Coronavirus job retention scheme) from 30 June onwards, employers can only furlough employees who have previously been furloughed for a full 3-week period prior to 30 June. After this date the scheme closed to new entrants.
In other words, since 1 July the scheme is only available to employers that have previously used the scheme for employees they have previously furloughed. There must have been at least one 3-week furlough period completed at some stage before the end of June.
The staff member did not have to actually be on furlough as at 30 June, for example some employers have been bringing staff back for a few days at the end of the month to deal with administrative tasks and then furloughing them again. These employees could be applied for under the extended scheme.
The final date by which an employer can furlough an employee for the first time was 10 June, in order for the requisite 3-week furlough period to be completed by 30 June.
The employers’ time limit to make any claims in respect of the period to 30 June, was 31 July.
Q: Under the extended flexible furlough scheme from July, do employers have to end an employee’s furlough and re-start it each month?
Employers do not have to end an employee’s furlough and re-start it each month from July onwards. Employees can have longer furlough periods; the claim periods and the overall length of furlough are different. Claim periods may also differ from the pay periods employers use. Payments should be made six working days after the claim is made.
Claim periods starting before 1 July
The claim period covered must have ended on or before 30 June, so separate claims are needed for June then July, even if employees are furloughed continuously on a longer furlough period. Claims for this period must end on or before 30 June but apart from that there is no maximum length so the claim period could be from 1 March 2020 (if employees had already been furloughed from that date) until 30 June. These claims must be submitted by 31 July 2020.
Claim periods starting after 1 July
Claims must now start and end within the same calendar month. The claim must be for at least 7 days. If the claim only covers the first few days, or the last few days in a month then the claim can be for under 7 days provided that the claim covers:
- the first or last day of the calendar month; and
- the period ending immediately before it.
The Government guidance now available shows that furlough claims can range between a few days or full weeks within a calendar month, but the overall furlough period for any employee can still overlap from one month to the next.
Employers must make only one joint claim for any period including all their flexibly furloughed employees in one claim. Where employees are furloughed continuously, the claim periods, if looked at together, should appear continuous, without any gaps in dates.
Q: Can employers claim jointly for employees even if they were furloughed for different periods?
Yes, an employer can include all employees who were furloughed during one claim period, even if they were furloughed at different times within that period or are paid at different times.
If an employer’s pay period overlaps more than one month those employers have to calculate and submit a claim for all employees who were furloughed covering that calendar month.
The Government guidance gives examples of an employer who furloughs two employees at the start of the pay period and adds a third a short time later. The claim period starts when the first employee is furloughed.
Alternatively, some employees may have been furloughed continuously with claim periods following on with no gaps in between the dates and another employee may worked for some of the days but then be furloughed again. The employer should still include all employees furloughed during the claim period. Employers do not have to wait until the end of a claim period to make their next claim. Employers can claim before, during or after payroll is processed.
Q: How do employers calculate claims for an employee on flexible furlough after 1 July?
Under the flexible phase of the scheme employees can be furloughed full time or part time (with a mixture of furlough hours and working hours).
For employees who are partially working the claim for those employees' furloughed hours needs to be calculated by reference to their usual hours worked in a claim period. Employers must calculate and submit details of the usual hours the employee would work, the number of hours they will work, or number of hours they have worked, plus the number of furloughed hours.
The Government guidance on the furlough scheme says that before calculating the claim employers need to work out:
- the length of the claim period
- what to include when calculating wages
- both the employees' usual hours and the furloughed hours.
The overall cap is then proportional to the hours not worked. Employers must report hours worked as well as the usual hours an employee would be expected to work.
Employers need to retain records of the employee's usual hours, actual hours worked and their furloughed hours for each claim period.
When to claim
Employers should ideally claim once they are sure of the exact number of hours being worked during the claim period. Claims can be made up to 14 days before the end of a claim period, but if employees are flexibly furloughed it is better to claim when the employer knows exactly how many hours the employees will have worked. For advance claims there is a mechanism for paying the grant back to HMRC if the employee ends up working more than expected.
For example, an employer and employee may agree that an employee, previously on furlough, returns to work half time, meaning that until October they now work for 20 hours compared to a 40-hour working week before the pandemic. For the hours the employee is not working they will be covered by furlough pay, and for the hours worked will be paid their salary as normal. If the employee normally earns £3,000 a month, they would have got full furlough pay of £2,400 a month. On returning to work half time the employee would earn £1,500 a month from the employer (as the proportion of normal monthly salary) plus £1,200 for the 20 weekly hours of furlough (half the monthly furlough pay). This means the employee would get a total of £2,700 a month for working half time (compared to £300 less if they were on full furlough).
For employees who work fixed hours and whose pay does not vary, the contractual hours used to work out claims should be the hours in the last pay period ending on or before 19 March 2020.
For employees who work variable hours and pay, the usual hours are either the highest of:
- the average number of hours worked in the tax year 2019 to 2020, or
- the corresponding calendar period in the tax year 2019 to 2020 so for e.g. July 2019 or August 2019.
In working out the usual hours, items such as annual leave and overtime are included.
The 80%, 70% and 60% grants available are reduced to reflect the proportion of usual hours that have been worked. The monthly cap is reduced proportionately as well. If the hours worked are unknown for example for piece rate workers employers should estimate the hours based on the average rate of work per hour.
For variable hours employees there are examples on the Government website of working our the average number of hours worked based on either the previous tax year or the corresponding calendar period.
Other calculation information
- An employee’s working pattern does not have to match their pay period (for example, an employee could work 40 hours across a week, but be paid monthly).
- If an employee with fixed hours took annual leave, sick leave or family related statutory leave at any time during the last pay period before 19 March, this leave is ignored when working out their usual hours.
- If calculations produce a number that isn’t a whole number then employers should round up to the next whole number.
It is unnecessary to work out usual and furloughed hours for fully furloughed employees. The maximum wage amount will still need to calculated, as will the amount of the employer's contribution to furlough pay between August and October.
There is extensive Government guidance available, including:
- Pre-claim steps
- How much employers can claim (including the employer percentage contributions)
- General updated claim for wages guidance
- Examples of calculations: Calculating a claim for a flexibly furloughed employee
Q: What records on flexible furlough claims should employers keep?
Employers should keep records of the following for six years:
- the amount claimed for each employee
- the claim period for each employee
- the claim reference number
- calculations (in case HMRC need more information about the claim)
- usual hours worked, including any calculations for employees you flexibly furloughed
- actual hours worked for flexibly furloughed employees.
The last two items above will give the employee’s furloughed hours for each claim period.
Q: What happens if employers miscalculate claims for flexibly furloughed employees?
If claims are made in advance and employees end up working more hours, meaning the furlough claim was too high, the amount overclaimed must be paid back. If there have been overclaims then any subsequent claim can be adjusted to reflect the overpayment.
If there has been an underclaim, employers can contact HMRC to amend the claim which will conduct additional checks.
The Government guidance explains how under and over claims can be dealt with.
Q: Does the newly extended furlough scheme mean that employees who started a new job after 19 March can now be furloughed?
The newly extended furlough scheme does not mean that employees who started a new job after 19 March can now be furloughed under the scheme. The main eligibility for access to payments for staff furloughed under the Coronavirus job retention scheme remains that there must have been an RTI submission notifying payment in respect of that employee to HMRC on or before 19 March 2020. For further details please see the FAQ on the change of payroll date in the Coronavirus Job Retention scheme from 28 February to 19 March, under the 'Pay during furlough' section.
Q: If an employee has already been taken off furlough before 10 June, can that employee be re-furloughed again after 10 June under the extended furlough scheme?
Yes, if an employee has already been taken off furlough before 10 June but has undertaken a full three-week furlough period before then, that employee can be re-furloughed again after 10 June under the extended scheme.
The official Government fact sheet on the Coronavirus job retention scheme says that from 30 June onwards, employers can only furlough employees who have previously been furloughed for a full 3-week period prior to 30 June. After this date the scheme closed to new entrants. There are limited exceptions for those on statutory maternity leave and other types of statutory family leave whose leave started before 10 June and ends after that date. For further details see the above FAQ on whether a staff member actually has to be on furlough leave as at 30 June to qualify and our FAQ relating to family leave and furlough.
Q: If an employee was furloughed but has already gone back to work part time, can that employee be furloughed again in the flexible furlough scheme from July onwards?
Any employees who were on furlough for a full three-week period before 30 June, can be furloughed again under the extension of the scheme. This means any employees who were furloughed and have returned to work part time can be put into the extended furlough scheme from July onwards. However, if any employees have already agreed to reduce their hours to a part-time role with a part time salary there may be difficulties with the amount of grant that can be claimed due to questions about which salary can form part of the claim. The guidance says that the amount of the grant claimed should be calculated by reference to the employee’s usual hours worked. Most of the Government guidance suggests that for non-variable hours employees, their usual hours are based on the number of hours the employee was agreed to work at the end of the last pay period ending on or before 19 March 2020.The guidance gives many examples but does not appear to address what happens if the employer and employee have agreed a reduction to hours since that date.
If an employee can return to a full-time role purely to be furloughed from part of it, that may still be in the spirit of the scheme if the reason for the reduction in hours was solely a temporary reduction attributable to the pandemic. To comply with the extended scheme, it is assumed that the applicable furlough rate should be based upon a percentage of full pay pre-furlough not a later agreed reduction. In any event flexible furlough from 1 July would not absolve the employer of the obligation to pay the salary for any hours worked or the percentage contributions to furlough pay due under the scheme in August to October.
Further guidance would be helpful and may fully address if employers can agree to increase part time employees to a full-time role before furloughing them. It may be that these employees can only be furloughed and employers can claim a proportionate amount based on the contractual arrangements that were in force immediately prior to 19 March but further guidance would be helpful.
Under the scheme, and under normal employment law, employers need to pay whatever is due under the employee’s contract for any hours worked and will be responsible for all tax and NI contributions due on those amounts.
Q: How flexible can the 'part-time' work be under flexible furlough? Can employees work 3 days one week and no days another week, for example, depending on workload?
From 1 July onwards employers and employees can agree the shifts, hours or days they choose, they will enter into a written furlough agreement in advance specifying the working and furlough time in any shift pattern. Employers and employees can vary the agreement to work, for example, three days one week and be fully furloughed in another week depending on the workload.
From 1 July claims can be for minimum periods of a week although they can be for longer periods. Claims cannot straddle a month from July onwards.
For employees who already have written furlough agreements the change to flexible furlough may require agreed changes to the existing wording depending on what was agreed before. For many, furlough will effectively continue although employers should at least agree timings for any days employees are required to work during flexible furlough.
Returning to work may require other changes to enable adherence to Government return to work guidance, or to allow social-distancing at work. Any changes to the terms of existing employment contracts will usually need employee’s (or recognised trade union’s) consent. Any variations need to avoid potential discrimination against those with disabilities or with caring responsibilities.
Q: Under the new scheme from 1 July, will HMRC fund 80% of the holiday pay if an employee works 2 days, and takes 3 days holiday?
The inter-relationship between flexi-furlough, holidays and holiday pay is complex.
A full-time employee can agree to work two days and takes three days holiday in a normal working week. Assuming the employee has 28 days holiday they are prepared to use, the pattern can be adopted for a maximum of nine weeks. How much furlough grant can be claimed for the three non-working days depends on the month when the grant is applied for.
- If the employee returns to work full time but books three days holiday in any week then the employer will have to fund both the working days and the holiday pay in full as normal. The employer cannot claim any portion of this back through the furlough grant.
- Alternatively, the employer and an employee (who must already have been on at least one period of furloughed by 10 June) can enter into a flexible furlough agreement. If this written agreement states that the employee will work on a pattern of two days per week and is furloughed for three days per week, the current guidance would allow the employee to then book holiday on those three furloughed days each week.
If the employee books holiday on three furloughed days per week the position is mathematically complex. The employer would have to pay full salary and NI and any pension contributions for the two days per week the employee is working per week. The reducing Government grant covers part but not all of the employee’s full holiday pay for their three day a week partially furloughed holiday time.
Employers must also fund the difference. The following would then apply to further payments depending on which month the holiday is taken:
- June: The employee would have to be fully furloughed and could not work two days per week. The employer would be able to claim 80% grant towards the employee’s holiday pay for five days furlough time, subject to the cap of £2,500.
- July: The two days working and three-day furlough pattern could start. The employer would be able to claim 80% grant towards the employee’s holiday pay for three days furlough time, but the 80% grant figure would be capped at a £1,500 contribution. The employer would have to top up to full holiday pay above the 80% grant or £1,500 per month. (The cap is not the full £2,500 because the employee is furloughed for three-fifths of the week and the cap is pro rata)
- August: The grant would cover 80% towards the employee’s holiday pay for three days furlough time but capped at a £1,500 contribution. The employer would have to top up to full holiday pay above the 80% grant or £1,500 per month. From 1 August onwards, the employer must also pay 100% of the employer’s NI and minimum pension contributions for both the two working and three non-working days.
- September: The employer could claim a 70% grant subject to a cap of £1,125. The full October grant cap would be £1,875 for an employee on full furlough but this will reduce in proportion to the two days part-time hours worked for this employee. The employer would pay the NI and any pension contributions and top up to full holiday pay above the 60% grant.
- October: The employer could claim a 60 % grant subject to a cap of £1,672.50. The full September grant cap would be £2,187.50 for an employee on full furlough but this will reduce in proportion to the two days part-time hours worked for this employee. The employer would pay the NI and any pension contributions and top up to full holiday pay above the 70% grant.
- The scheme ends at the end of October and the employer would pay full salary and NI as before the pandemic unless any other arrangement is concluded with the employee.
Q: From 1 July will we still be able to furlough staff on and off as we have been able to do previously (ie furloughed fully for 3 weeks, off furlough for 4 days, part furlough for 2 weeks then back on full furlough)?
Yes, from 1 July employers will still be able to furlough staff on and off as they may have done previously but with more flexibility. An employee can still be furloughed fully for 3 weeks, working part time for 4 days (and presumably furloughed for1 day), then on a combination of part-time working and furlough for 2 weeks then back on full furlough. Employers should agree the pattern with the employee and record this in a written furlough agreement.
Employers should remember that:
- A worker who has not previously been on furlough must be furloughed for the first time by 10 June at the latest or they will not be eligible for the grant after 30 June.
- From 1 July employers cannot claim for more than the highest number of employees previously included in a claim submitted under the first phase of the furlough scheme.
- There is a minimum claim period of one week from 1 July although claims can still be submitted in respect of longer periods such as fortnightly or monthly. Claim periods will no longer be able to overlap calendar months.
Q: How will flexible furlough work for those with no set hours?
From 1 July employers can:
- Continue to furlough previously furloughed staff.
- Agree working arrangements with previously furloughed staff whereby they return to work for any amount of time and any shift pattern on flexible furlough.
For those with no set working hours the amount of grant claimed under flexible furlough may be more complex. Employers and employees can still agree whatever pattern they choose for these workers. When submitting claims for a no set hours employee on flexible furlough, the employer will have to include information on actual hours worked, as well as the usual hours that the employee would have been expected to work under their contract in the relevant claim period.
The information about usual hours is likely to based on previous averages (as under the first phase of the furlough scheme). For those with no set hours, employers are likely to be able to claim for the grant percentage based on the higher of either:
- the same month’s earnings from 2019
- average monthly earnings from the 2019-2020 year.
If the employee with no set hours has not been employed for a whole year the average is likely to be based on monthly earnings since they started work. An online calculator is available to help employers work out how much can be claimed as wages, national insurance contributions and pension contributions with numerous examples and further guidance for those with no set hours.
Q: If we have employees returning from maternity leave after 10 June and before October can we place them on flexible furlough?
Yes, employers can furlough employees returning from statutory maternity leave after 10 June, even if the employer is furloughing them for the first time. This applies to employees returning from other types of statutory parental leave as well, including shared parental, adoption, paternity or parental bereavement leave.
The conditions the employer and employee have to meet are:
- The employer must have previously submitted a claim for any other employee in the organisation for a furlough period of at least 3 consecutive weeks between 1 March 2020 and 30 June.
- The employee being furloughed for the first time must have started maternity leave before 10 June. (The Government guidance says this applies to statutory leave but does not mention contractual leave.)
- The employee being furloughed for the first time must return from their leave after 10 June.
- The employee must be on the employer’s PAYE payroll on or before 19 March 2020. This means an RTI submission notifying payment to HMRC for that employee must have been made on or before 19 March 2020.
Employer’s claims generally are limited to the maximum number of employees previously claimed for in any group furlough claim made under the first phase of the scheme. However, any maternity or other family leave returners can be added to that cap. So an employer may make a claim for a number of employees which is slightly bigger than any previous claim because maternity leave returners are included.
Q: Can employees returning from contractual (not statutory) maternity leave after 10 June be placed on flexible furlough?
Unless any further Government guidance is given, it appears that employees returning from enhanced or contractual maternity leave after 10 June cannot be placed on flexible furlough unless they have been furloughed under the first phase of the scheme.
If employees can be placed on flexible furlough after returning from maternity leave appears to depend on whether they benefitted from statutory or contractual maternity arrangements and any previous periods of furlough.
Statutory maternity leave
In summary, the Government have confirmed that parents on statutory maternity leave who return to work even after the 10 June cut-off date are eligible for the extended furlough scheme. These employees are an exception to the normal 10 June cut-off date and can be furloughed for the first time under the extended scheme. The employer must operate the statutory scheme and certain other criteria must be met.
Enhanced or contractual maternity leave
The guidance suggests that employees who were absent on contractual maternity leave rather than the statutory minimum scheme cannot be furloughed for the first time after 1 July, although further guidance may clarify the position.
If employees do not wish to return promptly after maternity leave and do not qualify for furlough leave, employers can discuss the employee’s alternative suggestions which may include working from home, working part-time, sabbaticals, a postponed return date, unpaid parental leave and so on.
Those absent on contractual maternity leave returning to work after 10 June therefore seem to be in the same position as any other employee the employer seeks furlough for the first time after 10 June; they are too late for flexible furlough. The scheme has effectively closed to new entrants since 10 June.
Q: Can employees returning from statutory paternity leave after 10 June be placed on flexible furlough?
Employees returning from statutory paternity leave after 10 June can be placed on flexible furlough as long as their period of paternity leave started before that date. How statutory paternity pay interacts with the furlough scheme after 1 July (if at all) is not entirely clear because statutory paternity leave is much shorter than maternity leave and therefore far fewer employees will meet the criteria.
The furlough scheme effectively closed to all new applicants from 10 June. To be furloughed after 1 July employees must have previously been furloughed for at least one full 3-week period before the end of June. As an exception to this employees returning from various types of parental leave who are being furloughed for the first time after 10 June will still qualify. However, this is for only for employers who operate the statutory paternity or other statutory scheme.
It therefore seems the extended furlough scheme will assist women returning from statutory maternity absences, but will affect only very small numbers of employees returning from statutory paternity leave. The conditions that have to be met to furlough a paternity leave returner who has not previously been furloughed) appear to be:
- The employer must have previously claimed for any other employee for a furlough period of at least 3 consecutive weeks between 1 March 2020 and 30 June.
- The employee being furloughed for the first time must have started the leave before 10 June.*
- The employee being furloughed for the first time must return from their leave after 10 June.*
- The employee must be on the employer’s PAYE payroll on or before 19 March 2020. This means an RTI submission notifying payment to HMRC for that employee must have been made on or before 19 March 2020.
*Whilst meeting these criteria may work for maternity leave, statutory paternity leave is only two weeks. To qualify an employee must have started statutory paternity leave before 10 June, this means many employees with babies due between now and October who were not furloughed at all under the first phase of the scheme will not qualify for furlough because their leave will start after 10 June.
Employees who can be furloughed will fall into one of the following categories:
- Those already on furlough under the first phase of the scheme. These employees can also be furloughed from 1 July onwards. Realistically the furlough scheme is likely to offer greater pay compared to paternity leave so most new parents who have already been furloughed may prefer to care for their new baby whilst on furlough and not apply for paternity leave at all.
- Those employees not furloughed under the first phase of the scheme will qualify for furlough leave upon their return from statutory paternity leave as long as this started before 10 June.
- Those employees not furloughed under the first phase of the scheme may qualify for furlough leave if they have taken a period of shared parental pay which started before 10 June and they return after that date.
Employees who start paternity or maternity leave after 10 June will not qualify. Those on contractual paternity leave cannot be furloughed under the extended scheme unless they have been furloughed previously.
Q: Can employees returning from a contractual enhanced paternity leave scheme after 10 June be placed on flexible furlough?
Subject to further guidance it appears that the position for employers with enhanced paternity schemes is as follows:
- Employee takes contractual paternity leave under extended flexible furlough scheme after 10 June: Employers can probably claim the reducing percentage of furlough grant towards contractual paternity pay obligation if the relevant employee was previously furloughed and starts contractual paternity leave under the extended phase of the scheme. However, this position is not entirely clear and further Government advice may clarify this.
- Employee returns from contractual paternity leave after 10 June and has not been previously furloughed: This employee does not qualify for furlough leave under the extended flexible furlough scheme.
Under the first phase of the furlough scheme (prior to 30 June) Government guidance confirmed that employers can claim through the scheme for a percentage grant towards enhanced contractual paternity pay. It is not entirely clear but under the extended flexible scheme between July and October, it seems likely that employers can claim a contribution towards contractual paternity pay but only for a previously furloughed employee.
If the employer operates a contractual paternity scheme and there is an attempt to furlough the employee for the first time upon their return to work after contractual paternity leave after 10 June, it appears that the employee will simply be entitled to the contractual paternity leave and pay and cannot be furloughed and the employer can recover none of the pay back.
Further guidance on the scheme between 1 July and 31 October may clarify the apparent difference in treatment between those on statutory paternity leave and those on the employer’s own scheme.