61% of charities using the Coronavirus Job Retention Scheme currently anticipate that they will not be able to afford to bring back all of their furloughed staff into existing roles when the Scheme comes to an end.

p>This was found in a recent survey by the Institute of Fundraising, NCVO, and Charity Finance Group in May 2020.

At around the same time as this survey was conducted, the Government announced that the Scheme would be extended until October and introduced the concept of flexible furlough. The extension of the scheme provided some comfort to charities, particularly those unable to resume their normal activities due social distancing restrictions.

At the end of June, detailed guidance was released on the new flexible furlough scheme (New Scheme), which began operating on 1 July 2020.

The updated guidance provides clarity for charities on how the New Scheme will operate and addresses some previously unanswered questions.

On 8 July 2020, the Chancellor announced the creation of an employee retention bonus for

What Did We Know About the New Scheme?

We already knew that:

  • Flexible furloughing would be introduced from 1 July 2020, meaning from this date employees can work part-time whilst furloughed, something that was prohibited under the previous scheme.
  • Charities are free to agree with their employees what hours and shift patterns they will work on their return.
  • The charity will be responsible for paying wages in respect of the hours that their employees work and a claim can be made against the New Scheme, on a pro-rata basis, in relation to the hours that they are not working.
  • Until the end of July, employers can continue to claim up to 80% of the employee's pay (capped at £2,500) in respect of hours that are not worked.
  • From 1 August 2020, employers will be required to contribute to the cost of the New Scheme, starting with paying employer's pension and National Insurance contributions in August .
  • 10 June 2020 was the cut-off date for furloughing an employee for the first time, in order to allow the currently required 21 day furlough period to be completed by 30 June.
  • From 1 July 2020, employers were limited to furloughing no more than the maximum number of staff furloughed under the previous scheme.

What Additional Detail Does the Updated Guidance Reveal?

The updated guidance confirms that:

  • From 1 July 2020, the current three week minimum furlough period will be removed. There will be no minimum furlough period from July onwards, although for the purposes of claiming though the portal, employers will be limited to making one claim per week.
  • Flexible furlough agreements can last any amount of time and employees can be flexibly furloughed more than once. In practical terms, this means employers can continue to rotate staff between furloughed and working status, if desired.
  • Where an employee was on statutory family leave (such as maternity or paternity leave) on 10 June 2020, they can be furloughed for the first time after the usual cut-off date, as long as their employer had used the current scheme in respect of other staff by 10 June 2020.

Calculating Pay for Part-Time Staff on Flexible Furlough

The updated guidance contains several worked calculations to show how pay should be calculated under the New Scheme, depending on the individual's particular circumstances:

  • Broadly, it will be necessary to calculate the employee's usual working hours and then work out, as a proportion of these, their hours spent furloughed and their hours spent working.
  • The calculations employers will be required to carry out will differ depending on whether the employee usually works fixed or variable hours.
  • Staff should be paid in full for any hours they work whilst flexibly furloughed and the employer will be responsible for paying this element themselves.
  • The employer will then be permitted to claim under the New Scheme for time spent furloughed.
  • The usual caps will continue to apply.
  • From 1 August 2020, until the New Scheme closes on 31 October 2020, the Government grant will reduce as employer contributions increase.
  • There continues to be no obligation on employers to top staff up to full pay in respect of the period of time they spend furloughed, so furloughed staff will continue to be entitled to 80% of normal pay subject to the £2,500 cap.

What Do We Know About the Employee Retention Bonus?

This week the Government announced a one-off payment of £1,000 to UK employers payable in respect of every furloughed employee who remains continuously employed by them through to the end of January 2021. To qualify for the payment, the employees returning from furlough must earn at least £520 per month on average between the end of the Coronavirus Job Retention Scheme and 31 January 2021. Payments will be made from February 2021. Further detail about the retention bonus scheme is expected by the end of July.

Originally published by Veale Wasbrough Vizards, July 2020

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