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How the furlough scheme changed from 1 July – what is flexible furlough?

From 1 July 2020 the furlough scheme has been operating more flexibly.

The key changes from 1 July 2020 were:

  • All furloughed employees are subject to the new flexible furlough rules and the new basis for calculating claims
  • Furloughed employees can be brought back to work on a part-time basis for any amount of time and can work any work pattern
  • Employers can claim for the hours not worked compared the hours the person would normally have worked in that period
  • There must be a new written furlough agreement in place to record the agreement with the furloughed employee to return to work part-time
  • The new agreement (including a collective agreement) must be made before any period of flexible furlough begins but it may be varied at a later stage if necessary. The agreement must be incorporated into the employee’s contract of employment, either expressly or impliedly
  • Employers must keep a record of this agreement until at least 30 June 2025, and they must also keep a record of the hours the furlough employee worked and the hours that they were furloughed
  • Employees can be furloughed from 1 July 2020 for any amount of time and more than once
  • However, if you re-furloughed an employee after 10 June but before 1 July 2020, they had to be furloughed for an initial period of three consecutive weeks
  • Claims for payments under the scheme must not cross calendar months so if you are claiming for the initial three week period of a re-furloughed employee who was furloughed on 12 June for example, you must submit separate claims for the dates in June and July
  • Although flexible furlough agreements can last any length of time, you should only submit a claim to HMRC once a week.

Related FAQs

I have to pay my ex-spouse monthly spousal maintenance pursuant to a Court Order and I can no longer afford to pay. Can I stop paying?

Maintenance Orders embodied in a Court Order are variable. If you have lost a very large part of your income, then the Courts ought to take that into consideration when looking at a Court Application to reduce or end spousal maintenance payments. The outcome of any Court Application will, however, depend on a number of factors.

Technically, you should not just stop paying or reduce the maintenance payments, as your ex-spouse could then make an Application to Court for enforcement and payment of the arrears. You could ask the Court to forego you having to pay those arrears if you had evidence to prove that you could not make the payments, however, the Court will need to take a fair approach and you should not assume this request will be agreed.

You should first try to negotiate a reduction or termination of the maintenance with your ex-spouse, either directly or through a Solicitor. If this is possible, you should obtain a Court Order reflecting that agreement. Where a sensible compromise cannot be reached, a Court Application may be necessary.

What does this mean for my business?

The guidance is helpful and is likely to be useful to businesses as they seek to respond to the crisis and to restart their business activities as lockdown is eased. However, there remain outstanding questions. For example, can collaboration to prevent widespread insolvencies be viewed as in the interest of consumers? Businesses need to remain aware of the extremely high stakes involved in relation to competition law. Businesses contemplating collaboration with competitors should take legal advice before doing so.

How important is social distancing when planning your workplace?

It is absolutely critical to creating a safe workplace and to making workers feel secure.

This could include floor markings every 2m (as we’ve seen in grocery stores), stopping or limiting/staggering access to communal or common areas such as toilets and kitchens, rearranging workstations to maintain a 2 metre distance or, where this is not possible (for example in manufacturing facilities or production lines), erecting physical barriers and avoiding face to face working, encouraging the use of stairs and discouraging lift-use, designing a one-way system for entry and exit and looking at aircon/heating systems to see if any modifications are possible to prevent the spread of airborne particles. If you can increase ventilation in your workplace, it will help reduce risk.

The government has published detailed social distancing guidance for workplaces across sectors including manufacturing, retail, offices, construction and transport; it has also promised to continue to add to this.

How has the law changed?

In part in response to the Covid-19 pandemic, legislation was passed by the government earlier this year which sought to assist companies to trade through the current economic climate. Included within the measures is a degree of protection from compulsory winding up.

The Corporate Insolvency and Governance Act 2020 (The Act), was laid before parliament on 20 May, and became law on 26 June. It is important creditors are aware of what changes have been implemented and the potential and impact which it may have upon debt recovery action you may be considering or have already commenced.

The main part of the Act affecting creditors is the temporary restriction on presentation of winding up petitions and the factors that the Court has to take into account when deciding whether to wind up a company.

On Thursday 24 September 2020 the government passed a further statutory instrument which extended the operation of these restrictions. As a result, the measures which were due to expire on Wednesday 30 September 2020 have now been extended until 31 December 2020.

A key point to note is that the Act has retrospective effect so any pending petitions presented after 27 April will be affected, along with any winding up orders made after that date.

The Act has introduced the following restrictions:

  • A petition cannot be presented by a creditor during the period of 27 April 2020 and 31 December 2020 unless the creditor has reasonable grounds to believe that (a) coronavirus has not had a financial effect on the debtor, or (b) the debtor would have been unable to pay its debts even if coronavirus had not had a financial effect on the debtor;
  • A petition cannot be presented after 27 April 2020 if it is based on a unsatisfied statutory demand served between 1 March 2020 until 31 December 2020;
  • When deciding whether to make a winding up order the Court will need to be satisfied that the grounds giving rise to the petition would have arisen even if Covid-19 did not have a financial effect on the debtor;
  • All winding up orders made between the 27 April and 31 December will automatically be void (that is, of no legal effect) unless the Court would have made the winding up order if the new law was in force at the time the order was made.
Alternatives to redundancy toolkit

We have developed a Toolkit to help with these issues. The Toolkit contains:

  • LO1 How to Guide: Lay off and short time working
  • LO2 Letter directing employee to take annual leave
  • LO3 Letter confirming lay off (contractual right)
  • LO4 Letter confirming short time working (contractual right)
  • LO5 Letter proposing lay off (no contractual right)
  • LO6 Letter proposing short time working (no contractual right)
  • LO7 Counter notice disputing entitlement to claim redundancy payment
  • LO8 Script for announcing lay off or short time working (contractual right)
  • LO9 Script for announcing lay off or short time working (no contractual right)
  • LO10 Letter proposing reduction in working hours and pay

The cost of this Toolkit is £500 plus vat. If you would like to find out more about the Toolkit, please speak to your usual Ward Hadaway employment contact, or get in touch one of the contacts at the bottom of this page.