Flexible Furlough of Directors

The Flexible Furlough Scheme is an amendment to the Coronavirus Job Retention Scheme (CJRS), which came into effect as of 1 July. This Directors’ Flexible Furlough Letter should be used by employers to seek the agreement of directors (who are eligible to furlough) to work reduced hours under the Flexible Furlough Scheme. Records relating to these agreements should be retained for six years.

As of 1 July 2020, directors who have already been furloughed are permitted to work reduced hours and their employer can claim under the CJRS for directors' wages for the normal hours that they do not work.

This Directors’ Flexible Furlough Letter includes optional clauses covering different flexible furlough arrangements and asks the director to sign the agreement to indicate their agreement to the terms set down in the letter.

Flexible furlough is a part work/part furlough arrangement. There is no requirement for employers to offer flexible furlough arrangements and they are able to leave staff on full furlough if they prefer.

The rules on how flexible furlough pay is calculated are complex but, in general terms, employers will claim a pro-rated amount of 80% of salary, based on the proportion of hours not worked out of normal working hours. In order to submit a flexible furlough claim, the employer is required to calculate a “baseline” number of “usual hours” so that this can be compared with the actual hours worked.

Note that as this flexible furlough letter refers to directors (rather than simply employees), they will have Companies Act 2006 duties to maintain and this letter refers to the reasonable necessity to fulfil these duties even when the director is not working for the Company and is on furlough leave.

In respect of full furlough, the minimum three-week period for furlough has been removed with effect from 1 July 2020. There is no minimum furlough period after 1 July, although any claim must relate to a minimum one-week period.

Employer funding under the CJRS will gradually decease from 1 August 2020 and the CJRS will end on 31 October 2020.

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