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Flexible Furlough – the payroll implications

Posted on 17th June 2020 - News

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As lockdown is eased many businesses will be looking at bringing back their furloughed workers.

As part of the measures to support employers who may want to manage returning workers in line with business demand and financial affordability, the government has introduced flexible furlough.

With effect from 1st July 2020, employers can bring back employees who have previously been furloughed, for any amount of time and any shift pattern, whilst still being able to claim under the Scheme for the normal hours not worked.

The provision of flexible furlough will no doubt be most welcome to those employers who have furloughed staff. 

Whilst entitlement to flexible furlough does not come in until the beginning of July, it is important that employers consider the potential payroll and HR implications of this provision. For many, the basis of calculating their furlough grant has been challenging to say the least. Flexible furlough creates a new set of challenges, with claims based on hours instead of days. Individual circumstances could potentially lead to further complexities when calculating a claim, thereby increasing the time it takes for the payroll team or provider to process the payroll.

This is aside from the implications of calculating claims in relation to those employees engaged on variable hours contracts or giving consideration to holiday pay implications.

Certainly, it is essential that a claim should not be made until you are sure of the exact number of hours worked during the claim period. If you claim in advance and your employee works more hours than the hours used as the basis for the furlough grant claim, then you will have to pay back any amount overclaimed to HMRC.

Whilst we have covered very briefly some of the issues around the introduction of flexible furlough, in our weekly update next week we will provide further in-depth information and guidance to help ensure employers can prepare for its introduction.

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