What is Flexible Furlough?

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What do you need to know about this coronavirus assistance program?

When the Covid-19 pandemic hit the United Kingdom, the nation was put on lockdown to staunch the wave of infection. Businesses were inevitably affected as people were told to stay at home. 

To cushion the economic impact, the government rolled out a furlough scheme in March to prevent the loss of jobs and the closure of businesses. Under this program, businesses could retain staff who were contractually employed but were unable to report to work. 

Since then, there have been efforts to restart the economy. Lockdown measures are no longer as stringent, and people can move around more freely. With these developments, a new scheme is introduced. Dubbed as the flexible furlough, it is the next step of the existing furlough scheme. 

What Does Flexible Furlough Contain? 

Under the furlough scheme, employees can expect to receive 80 percent of their wages up to £2,500 per month. It is the government that pays for this. The objective is to ease the financial burden on businesses and help them stay afloat so they can continue to operate when the crisis eases.   

With the flexible furlough, the financial support provided by the government is tapered off as more people can get back to work. It gradually shifts the financial responsibility of caring for the workers back to the employers.

The flexible furlough scheme states that in June and July, the government will continue to assume 80% of the wages up to the amount of £2,500. It is also the government that assumes payment for the National Insurance (ER NICS) as well as the pension contributions. In gist, the employer does not have to pay for anything related to the furloughed employee. 

By September, employers are expected to begin their contributions. The payments made by the government for salaries is decreased to 70%, with a cap of £2,187.50. The remaining 10% of the wages for the furloughed employee is assumed by the employer, with a cap of £2,500. Employers are also expected to resume payment for the ER NICS and pension contributions.

Further reductions in the government’s role are made by October. The government will pay 60% of the wages with a cap of £1,875. The remaining 20% of the furloughed worker’s salary is to be shouldered by the employer, with a cap of £2,500. Employers will continue to pay for ER NICS and pension contributions. 

What are the Requirements of the Flexible Furlough? 

Starting July 1, workers can start reporting back to work part-time at the discretion of the employer. It is up to the businesses to decide the number of hours the employee needs to check-in as well as the shifting patterns of employees. 

Employers should submit information on the number of hours the employee is expected to work as well as the actual hours of work rendered during the furlough period. 

The furlough scheme will no longer accept new applicants by the end of June. To qualify, employers are required to submit their applications by June 10. The business needs to specifically state in their application that they are adversely affected by the pandemic. 

Why is the Flexible Furlough Important? 

The UK government stated that it prioritizes assisting people and businesses as the pandemic unfolds in the country. The furlough scheme is one of the programs that ease the burden of continuing operations businesses while ensuring that workers still receive the money they need for their living expenses. 

The flexible furlough is a recognition that the furlough scheme by the government cannot continue indefinitely. The adjustments outlined in the flexible furlough scheme provides opportunities for people who can work to report to their places of employment, without losing government support. 

If you want to learn more about the discussion of flexible furlough, you can get in touch with Annette & Co. for FREE business advice. Better yet, you can tune in to my Podcast – Uncover Wealth Radio – where I talk about the latest updates on UK Businesses and also COVID-19 every workday at 11:00 in the morning. You can also join my exclusive Facebook group that talks about a lot of business matters and UK businesses.

For more information about this matter, be sure to check out Episode 143 of Uncover Wealth Radio. If you’ve missed the LIVE broadcast, you can always revisit the episode here on our website, Annette & Co.

Annette Ferguson

Annette Ferguson

Owner of Annette & Co. - Chartered Accountants & Certifed Profit First Professionals. Helping Online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.

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