Coronavirus Update: Flexible Furloughing

Updated: Jul 9, 2020

We thought it would be useful to provide a short update on the changes to the coronavirus job retention scheme which are coming into effect on 1 July. Full details can be found here.

It’s probably worth a quick recap on where we are with the retention scheme and what businesses are to expect from the changes.

Around a quarter of the UK's workforce is currently furloughed and so the government has begun to shift its emphasis on getting people back to work and this underpins the new changes.

There are two main changes coming into effect:

  • Employers will need to contribute towards furlough pay; and

  • A scheme of flexible-furloughing is to be introduced.

Changes to Employer Contributions

From 1 August 2020, employers will need to contribute towards the 80% furlough pay. This will be on a tapered basis over August, September and October.

So beginning in August, employers will need to pay employees national insurance contributions and the pension contributions. This represents about 5% of the gross employment costs for the average claim.

Then in September, the government will only contribute 70% of pay, up to £2,187.50. Remember, furloughed employees will still be entitled to receive 80% of their pay, up to the £2,500 cap. Employers will contribute 10% of pay, which could be up to £312.50 per month for a furloughed employee receiving the full cap.

Then in October, the government will lower their contribution to 60% up to a cap of £1,875 per month. This means employers will contribute 20% of pay, and up to £625 per month.

The scheme then finishes at the end of October.

Flexible Furloughing

The other important change, which will come in from 1 July, is the introduction of flexible furloughing. This will allow employers to bring staff back part time for any hours or shift patterns agreed between the employer and employee.

Employers will bear the cost in full for any hours worked by furloughed employees and can then claim a furlough grant to cover the balance between