The changes are gradual with the intention of encouraging employers to bring employees back to work.

1 July 2020 – introducing flexible furlough

From 1 July 2020 employer’ will be able to bring employees back to work on a part time basis and the Government will only provide support for hours not worked. Employers will therefore need to cover the full cost of the hours worked, but the furlough grant rules will apply to the hours not worked, providing 80% of furloughed salary costs up to £2,500 cap. In relation to the hours not worked, the rules are unchanged from June.

However, employers will only be able to claim for employees who have previously been furloughed for a three-week minimum period.

Also from this date the number of employees that can be claimed for in a furlough period cannot exceed the maximum number claimed for under any previous claim period.

There are HR issues to be considered when bringing employee’s back to work on a part-time basis as it will need their agreement as a temporary variation of contractual terms. The revised working hours can be changed throughout the period, but each arrangement must cover at least one week.

The furlough grant claim will increase in complexity if staff are on flexible furlough, particularly for those employees with variable hours and pay. Claims will also now need to be split per month as the rules change at the beginning of each month. This means for a payroll period that straddles a month end that two separate furlough claims will need to be made for each pay period. HMRC’s examples of calculations can be found here. Hours worked and not worked will need to be included in the claim for each employee.

31 July is also the last date that employers will be able to submit claims for periods prior to 30 June.

August 2020 – reduction in Government support

From 1 August, employers will have to cover employers’ National Insurance and pension costs for furloughed workers. For many smaller businesses this will not dramatically increase costs as employers National Insurance is covered by the Employment Allowance.

For time not worked, the scheme will continue to provide 80% of furloughed wages up to £2,500 cap.

September 2020

From 1 September, employers will, in addition to previous changes, have to start contributing towards the furlough scheme costs. For September 2020, this will amount to 10% of furloughed wage costs for time not worked.

For time not worked, government support will reduce to 70% of furloughed wages up to a revised £2,187.50 cap. Despite the reduction in support, the employer will still need to pay the employee the lower of 80% of the relevant salary and £2,500 per month.

October 2020

From 1 October, employers will pay a further increased contribution to the furlough scheme costs. For October 2020, this will amount to 20% of furloughed wage costs for time not worked.

For time not worked, government support will reduce to 60% of furloughed wages up to a revised £1,875 cap.

Full guidance from HM Revenue & Customs can be found here.