Flexible Furlough Scheme – new rules from 1 July 2020.

Flexible Furlough Scheme – FAQs

Published 13th June 2020

After much anticipation, the guidance was finally published last Friday to make clear the rules surrounding the Flexible Furlough Scheme which is due to launch on the 1st of July 2020. The deadline for putting employees onto the current Furlough Scheme has now passed in order to meet the 3-week minimum requirement. What do these new rules mean for employers? We have put together some frequently asked questions our HR experts received in the lead-up to the scheme.

Can I put an employee onto the scheme who has been on maternity, shared parental, adoption, paternity or parental bereavement leave?

It appears that this is permitted even if you are furloughing them for the first time. You can do this on the proviso that you have previously submitted a claim for any other employee in your organisation in relation to furlough for at least 3 consecutive weeks between 1st March 2020 and 30th June 2020. This means that if you have not used the scheme before for any other employee, you won’t be able to furlough your employee who is returning from one of the leave types mentioned above. They also need to have been on your PAYE payroll on or before the 19th of March 2020 with the relevant RTI submission being made.

Do I have to put an employee on for a minimum period?

No, the only requirement for this is any employees who are furloughed between the period of 1st March 2020 to 30th June 2020. From the 1st of July 2020, provided that an employee has been on a previous claim you have made as the employer for at least 3 consecutive weeks, you are able to flexibly furlough them as you need to, and in line with all employment laws.

If I’ve made someone redundant, can I bring them back and flexibly furlough them for a longer period?

Yes, provided they were made redundant after the 19th of March 2020, met the previous criteria, and have been on a previous furlough claim you have made for them as their employer. Depending on the period of time between making them redundant and bringing them back, there may be tax implications in relation to any statutory redundancy payment made, therefore employers should take advice as necessary on their situation.

Is there a minimum requirement for how long someone can be brought back for?

No – not from the 1st of July 2020, it is a flexible arrangement subject to them qualifying for it. There is a minimum claim period of 7 calendar days, though.

Will they be paid at 80% when they work for me or will this be 100%?

Employees can either remain fully furloughed at 80% (no 3-week minimum period) from the 1st of July 2020 which would be at 80% or greater depending on your agreement with them, or they can return to work flexibly, receiving the agreed furlough amount for the hours they aren’t working and their normal pay for the hours they are. It is worth noting that National Living Wage and National Minimum Wage increased in April 2020 so any hours being worked must be paid at the relevant statutory rates.

How do I claim for the money?

Using the same portal as before, presumably there will be some sections which will be re-worded, but you must keep records of how many hours your employees work and how many they are furloughed for, for five years.

Do I need a new agreement with my employees?

Yes, the newly issued guidance on the 12th of June 2020 states that you’ll need to agree this with the employee and keep a new written agreement that confirms the new furlough arrangement for five years, ensuring it complies with all employment laws. We are happy to provide this agreement complimentary to Nicholsons clients – please email hrmail@nicholsonsca.co.uk to request a copy.

It is worth bearing in mind that legislation will be added to the Finances Bill very shortly which will allow tax officials to recoup erroneously claimed public funds, which comes with a risk of criminal prosecution. This is understandably the last thing employers will need given the current outlook, so ensure you take professional advice on your circumstances if you are unclear.

Cash is king, we know that but more so now. Five tips for proactive cash management

Over the last two months monitoring cash flow has been a top priority for most businesses. For most, this has been activity thrust upon them by the current situation. Even though the shock of lockdown is becoming a distant memory monitoring cash is still a vital activity and one that should be led by senior leaders/ owner-managers.

For many SME owner-managers, proactive and systematic cash management is not something done routinely. We know from the results of research that cash flow hiccups are often identified at the eleventh hour giving little time to identify and arrange a suitable funding solution.

“Instead of looking through the telescope the wrong way round business owners should be looking through it normally to spot cash challenges in the distance and give time to deal with them.”

Without cash a business is doomed and therefore its management should be the number one priority of every senior team or owner-manager.

Outlined below are five tips to help your business become more proactive around cash management.

Make cash management everybody’s priority

Communication is important. Inform senior managers why cash management is important. Let them see the plan, the challenges, risks of not being proactive and the numbers involved. Focusing the minds of leaders, senior managers and budget holders and asking them to communicate to their teams makes cash management an important task for everybody, part of every employees role. Communicating, top-down ensures there is no misinformation within the team and everybody knows how important a task it is.

Manage cash inflows

For most businesses that need to consider managing incoming cash, managing Aged Receivables is where the focus should be. Consider automating the routine day to day debt collection with an app like Chaser leaving your teams time free to focus on that stubborn debt.

Think too about how to make it easy for your customers to pay you. Adding payment links to digital invoices and collecting retainers by Direct Debit may speed up payment times too. Check out Xero support for how to do this to invoices in Xero.

Finally consider undertaking credit checks on all new major customers. This will help you evaluate the risk of non payment before you start to raise sales invoices but may also enable you to negotiate different payment terms.

Have you taken advantage of all government schemes?

There have been almost weekly announcements of support for businesses and you would have been forgiven for missing one of the non mainstream support packages.

Review the .gov website for details and follow them up.

Talk through cash flow shortfalls early

We all have people that support us when we need it. Whether that is an employee or your external accountant, talk to them about cash worries and challenges. Identify the challenge and find a solution to deal with it. For help and assistance with managing cash and finding a solution talk to either Richard Hallsworth, Stephanie Smith or Steve Robinson, our funding specialists.

Revisit your cash flows regularly

This is a vital activity. Amend cash flow models and forecasts as things become more certain. If you are establishing plans to bring income forward or steepen the cash coming in curve on the way out of lockdown make amendments showing the impact of each measure.

Add in changes to government backed support schemes as they are secured and update predicted cash coming into the business when you speak to debtors.


There are lots of examples of apps that pull data from your accounting software but as yet I am to be convinced on how accurate a picture they present. For now in our business we still use a spreadsheet to forecast cash over the current month and then the next 90 days. This is a daily summary and reconciled each day to the bank.

Final thoughts 

The management of cash flow has never been so important as it is now. Understanding where any gaps might be, how deep they may become and the impact on the position of the business is vital if long term health is to be preserved.

Leading from the front with a clear and proactive message on the importance of good cash management should be a top priority in any sMe whilst owner managers in Smes should focus on cash and ensure they understand the position themselves.

Farming and Agriculture Update: Ramblings of a Rambler

Having found “pastures new” to walk along in the lockdown, most of which have been public footpaths, I have been amazed at the variety of stages that arable crops have reached even within a short distance from each other. The weather over the past six or seven months is largely to blame, having gone from one extreme to the other, causing ground conditions to go from boggy to cracks in the dry ground. An extremely dry April was followed by the driest May since records began over 150 years ago! Farmers and growers will be desperate for a return of some moisture to bring the crops on, but not too much, please! So hopefully you are reading this having been “rained-off”, and you will find something of interest in these musings of current events in the farming and business sphere:-


Firstly the pandemic – this is one of the best times to be located in a rural area, surely. With space to walk, and farmers able to go about (most of) their daily routines without being locked-down, most people have been able to get out and enjoy the countryside during the re-awakening that is Spring. The number of cases of COVID-19 in our area has been relatively low, but that is not to under-play the potential for damaging repercussions if the hygiene and distancing measures are flouted.

For those businesses that employ people, perhaps in diversified farms, and have had to reduce hours or put employees onto furlough arrangements, our website contains comprehensive information about the Coronavirus Job Retention Scheme, and changes to it along the way.

There have been a number of other COVID-19 related problems caused to farming which I have summarised here-

  • Shortage of labour – the new points Based System (PBS) for immigrants together with the virus means that a lot of farmers, particularly in south Lincolnshire, are concerned about the availability of labour for harvest. The virus, and lack of freedom of movement will be more relevant this year, but the PBS will come into effect on 1st January 2021 and could impact next year. The Government has tried to help the current situation by launching Pick For Britain, to try and recruit more domestic workers to work on the land. You will see that Prince Charles is giving his support to this campaign.
  • Fly-tipping – a perennial problem in rural areas, but made worse by the closure of many waste disposal sites. Farmers are asked not to touch the waste, as it may be hazardous. Instead it should be reported to your local authority.
  • Rights of Way – As mentioned above, the public have been out and about enjoying the countryside in ever-increasing numbers since the lockdown restrictions were eased. This hasn’t always led to them following the right paths, or the Countryside Code. To aid their understanding of the need to keep the countryside, and the health of the nation’s food producers, in good order, the NFU have published signs with agreed wording that can be downloaded from NFU online by land-owners, and printed off for displaying on gates, fences etc.
  • Hardship Fund for Dairy Farmers – The Government have set up this fund to help dairy farmers with the impact of the coronavirus on their industry. Demand for milk has been severely impacted on by the fall in the restaurant and hospitality trade since the lockdown began. The fund provides grants of up to £10,000 per farmer. More details are on the .gov website  
  • Concerns for malting barley – with the closing down of the hospitality sector, the demand for beer has reduced significantly. The fall in consumption in licensed premises has not been made up for by “drinking at home”, even though this has gone up by 22% since lockdown! Add to this the extra spring barley planted to replace winter wheat lost to the weather, and the possibility of over-supply of malting barley looks like a distinct possibility.
  • BPS and Country Stewardship applications – the deadline for these has been put back a month to 15th June 2020.
  • Sadly the Lincolnshire Show has been cancelled for 2020. There will still be a Virtual Lincolnshire Show, – please look out for our reminiscences of past Shows when watching the virtual Show online!
  • If you need any further information on business matters, there is a lot of information on our website which you may find useful.

In other news

Away from the difficulties caused by the pandemic, there have been a number of other happenings in the farming world that will hopefully be of interest:-

  • Oil Seed Rape – The NFU is pressing the Government to support OSR growers until an effective alternative to banned neonicotinoids can be found. The amount of OSR planted has fallen considerably in the last year, and crops have been ravaged by the cabbage stem flea beetle due to the lack of an effective treatment
  • Brexit trade talks – these are still moving along in the background, along with negotiations with other non-EU countries, as we move through the transition period. The farming trade bodies are applying pressure to our negotiators to make sure quality standards are not lowered, and our food quality is not compromised as a result
  • Sugar beet – The campaign is finally over! It officially finished on Good Friday, some 208 days after it started – the longest campaign on record, again down to the weather.
  • Air quality – Just as an aside, the farming industry has had a lot of bad press in recent years from the green lobby about the emissions from farming, generated by machinery using diesel, and livestock producing methane. Reports are now showing that all CO2 emissions are markedly down, and the air is cleaner than for some 15 years, but I haven’t seen a lot of credit being given to farmers for this. Maybe farmers weren’t causing such a big problem before after all!

A ramblers final thoughts 

One final thought, or request, if it applies to you.

It is important in family farming partnerships that a Partnership Agreement is put in place so that all partners, and other family members, are aware of their rights and responsibilities.

If not, many misunderstandings can occur, often leading to long and expensive court cases. I was reminded of this by the recent case of Dorothy Horswood V Peter Horswood. As the case name suggests, this was a family dispute. It related to whether or not a formal Partnership Agreement, put in place after farming had been on-going on an informal basis for many years, would over-write alleged promises made before the written Agreement was signed up to. PH, the son of DH, argued that he expected to receive his mother’s share of the partnership land “free of charge” as part of his inheritance. When his mother decided to retire from the partnership in 2016, her son exercised an Option per the Agreement to buy her land, but subsequently felt he should have received the land for nothing, and the Partnership Agreement should be “looked through”. His case was dismissed, and the Partnership Agreement was deemed to have been signed up to by all Partners, and was the governing document of the partnership and all its assets. It over-rode what had gone before.

If you want certainty over your affairs, that would best be achieved by having a robust, and regularly reviewed, Partnership Agreement.

As always agriculture is a big part of the local economic picture and whilst farmers might not be affected by the lock-down they and their businesses will still be affected. If you have any questions regarding the above note please contact Richard Grayson or Graham Pogson on 01522 81 5100.

Self-Employment Income Support Scheme (SEISS) extended

The Chancellor has confirmed the extension of the Self-Employment Income Support Scheme (SEISS), with the announcement of a second and final grant to support the income of self-employed individuals during the Coronavirus outbreak.

The first and current round of grants under the scheme allows self-employed individuals to claim a taxable grant worth 80 per cent of three months’ average monthly trading profits, capped at a total of £7,500 and paid in a single instalment.

It has seen 2.3 million claims to date, collectively worth £6.8 billion.

Applications for this round of grants will close on 13 July 2020. However, the Chancellor has now announced that self-employed individuals will be able to claim a second grant in August. This will be worth 70 per cent of three months’ average trading profits and will be capped at £6,570 in total, also paid in a single instalment.

Individuals do not need to have claimed the first grant to be able to claim the second.

Unlike the Coronavirus Job Retention Scheme (CJRS) for employees, self-employed individuals may continue working, begin a new trade or take on new employment while in receipt of a grant.

The full criteria for qualification for the scheme remain unchanged. Applicants must:

  • Be self-employed or a member of a partnership;
  • Have lost trading/partnership trading profits due to COVID-19;
  • File a tax return for 2018-19 as self-employed or a member of a trading partnership;
  • Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID-19) and intend to continue to trade in the tax year 2020 to 2021; and
  • Have trading profits of less than £50,000 and more than half of their total income come from self-employment. This can be with reference to at least one of the following conditions:
    • Trading profits and total income in 2018-19
    • Average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.

The scheme is not available to people working through their own limited companies.

Further details about how to apply for the second and final grant will be announced on 12 June 2020.

Chancellor unveils changes to Coronavirus Job Retention Scheme (CJRS)

The Chancellor, Rishi Sunak, has announced a series of changes to the Coronavirus Job Retention Scheme (CJRS) from July that will see furloughed employees able to return to work part-time, but with the value of Government support reducing gradually from August.

Rishi Sunak, Twitter feed 29 May 2020

The changes in summary

  1. The scheme will remain in its present form for those who need it until the end of July with no additional costs to the employer.
  2. From August the employee will still receive 80% of wages when fully furloughed but the employer will no longer be able to reclaim the pension and NI contribution – they will have to meet that as usual.
  3. From September the employer will be required to pay the pension and NI together with 10% of the 80% furlough wages that the employee receives.
  4. From October that contribution from the employer will increase to 20%.
  5. From 1 July there will be the introduction of a flexible furlough scheme where employees may be asked to come in to work on full wages for part of the week and receive the 80% of wages for the time they are not working (subject as above to the contributions set out).

The changes to the scheme

A system of ‘flexible furloughing’ will come into effect from 1 July, allowing employers to bring back furloughed employees for any amount of time on any shift pattern, while still able to claim a grant in respect of the time not worked when they otherwise would.

Employers will have to pay employees at their usual rate of pay for any hours they work, while also covering the cost of Employer National Insurance Contributions (NICs) and minimum employer automatic enrolment pension contributions that this pay attracts.

They will need to reach new flexible furlough agreements with any furloughed employees brought back on a part-time basis.

From 1 August, CJRS grants will cease to cover Employer NICs and pension contributions, with this cost passing to employers. The grant will continue to cover 80 per cent of furloughed employee’s usual wages, up to a cap of £2,500 a month.

However, from 1 September, the value of the grant will fall to 70 per cent of a furloughed employee’s usual wages, capped at £2,187.50 a month. Employers will be expected to contribute the remaining 10 per cent plus NICs and pension contributions to reach a combined total payment to the employee of 80 per cent of their usual wages, up to a cap of £2,500 a month.

October will see the value of the Government contribution fall again to 60 per cent, capped at £1,875 a month, with employers expected to contribute 20 per cent of a furloughed employee’s usual wages plus NICs and pension contributions to reach the total of 80 per cent, capped at £2,500 a month.

At the same time, the Chancellor confirmed the closure of the scheme to new entrants from 30 June. After this point, employers will only be able to furlough employees who have been furloughed for three full weeks at any point before 30 June.

This means the last day an employer can furlough an employee for the first time will be Wednesday 10 June.

Furthermore, after 30 June, employers will not be able to claim for more employees in a claim period than the maximum number they have claimed for in any period under the scheme in its current format.

Full details of how the scheme will operate from this point are expected to be announced on 12 June 2020.

An example 

  • In July you may ask an employee to return from furlough for 2 days per week.  You will pay them 100% of their normal wages for those 2 days and you can still claim the other days at 80% plus pension and NI contributions
  • In August you may bring back more employees (or increase or decrease days of work) from furlough on, say, 3 days per week.  You will pay those employees 100% of their normal wage for those 3 days.  For the 2 days they are not at work you can claim 80% of their wages but you will have to pay the pension and NI contribution
  • In September you bring back more employees on flexible furlough working 3 days per week.  You will pay 100% of wages for the days worked but will still be able to claim 70% of the employee’s wages for the days they do not work.  You will, however, HAVE to pay 10% of their 80% wages (their income does not go down) and the employers’ NI and pension contributions
  • In October the employer contribution increases to 20% plus pension and NI and then closes on 31 October.

The announcement comes against the background of an easing of the lockdown restrictions that have closed down large sections of the economy since late March, with the Government now encouraging certain sectors back to work.

Guidance still to work from home, where possible

Where it is possible to do so the Government guidance is that working from home should continue for those who are able to do so.  People furloughed because of shielding (which has been extended for the foreseeable future) or because of childcare issues will be paid as set out above.

However, those who are struggling with childcare issues should be able to potentially return at least part time when schools and nurseries and other childcare settings such as childminders are allowed to open again.  HOWEVER it is important to bear in mind that with July comes the school holidays and for many it is grandparents who bear the burden of childcare.  We do not yet know whether restrictions will be lifted enough by then for grandparents to take on their usual caring roles.

CJRS and record keeping. 

The CJRS was announced by the Chancellor in March and currently allows employers to furlough any employees who were on a PAYE payroll and reported to HM Revenue & Customs (HMRC) through the Real-Time Information (RTI) system by 19 March 2020.

Since then, more than a million employers have collectively claimed £15 billion from the scheme in respect of 8.4 million employees, via the Government’s online portal.

The announcement comes days after the Chancellor issued a new Direction to HMRC, updating the record-keeping requirements of the scheme.

Under these requirements, the written agreement that the furloughed employee will, under the current terms of the scheme, cease all work must be retained until 30 June 2025 and:

  • State the main terms and conditions;
  • Be incorporated either expressly or implicitly in the contract of employment; and
  • Be either made or confirmed in writing.

It is widely expected that HMRC will audit use of the scheme retrospectively over the coming months and years, with potentially hefty penalties for those found to have acted improperly.


Moving your exit “V” curve, let’s revisit our exit strategies

The impact on the economy of lock down has been significant, possibly the most significant since the 1700’s. We’re told that the economy will bounce back and that the shape of the curve will be a “V” shape. 

Whilst the inward shape of the curve in terms of the gradient is now known the exit curve is not. Clearly the bounce back is not going to be as steep and probably different for each industry (and business within) as restrictions are relaxed. 

In order to understand your cash requirements until restrictions are relaxed and through the initial opening you should be putting a cash flow forecast together and updating it on a weekly basis. 

But that’s operational and I want to talk about strategy. 

Let’s say that based on government advice and modelling you have forecast your outward “V” curve, your anticipated cash inflow from sales. On the graph below this is the red curve. It’s your base income forecast. 

My challenge to clients is to now identify ways you can steepen the gradient (i.e. increase the pace of recovery – green line) or move it forward (i.e. create income ahead of your base forecast – blue line). 

One step to the left!

I’ve talked to dozens of small business owners who are currently closed but are finding legal ways to create income streams, such as cafe’s selling take out pizza or meals etc. They are moving their “V” curve, creating income ahead of where they might expect to and getting ahead of their base forecast.

The blue curve is the effect of this. There will be new ways of generating income by either delivering new products and services or delivering existing products and services in new ways whilst restrictions are in place.

Keep running up that hill

I’ve talked to other business owners who are thinking of ways to reopen with a bang, ensuring that when they do open income is maximised in whatever way they can. One of my clients, a small hairdressing business, is actively starting to fill a virtual appointment book ensuring that their clients have a place booked for when they reopen and guaranteeing their income. They are not waiting for customers to come to them!

The green curve is the effect of this. There will be ways of selling more to existing customers or attracting new customers.

A word of caution 

The one vital boundary to bare in mind when starting to identify ideas is trust. Being responsible, in terms of applying government guidance will be a vital part of long term sustainability. Businesses that flout rules and guidance, in their “customers minds”, may be dealt a significant blow when those customers come to make their next purchasing decision and vote with their feet.

So in summary, strategic thinking around your exit “V” curve could be a way of finding your way through and out of restrictions maximising revenue and cash at this important time but also identifying new ways to generate sustainability.

If you’d like to talk this through please contact me (Richard Hallsworth) on 01522 81 5100 who would be happy to have a virtual coffee with you.

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