On Friday 29 May 2020 the Chancellor announced an update to the Coronavirus Job Retention Scheme.
Key Points!
• The scheme will close to new entrants from 30 June. 10 June 2020 will be the last day that employers can place employees on furlough in order for the current 3-week period to be completed by 30 June 2020.
• From 1 July 2020 a new “flexible furlough” is being introduced which means that employees will be able to work part-time and be furloughed part-time. It will be up to businesses on how this will work in terms of time split and they will be responsible for paying the employees’ wages while in work.
• From 1 July 2020, the scheme will only be available to employers that have previously used the scheme in respect of employees they have previously furloughed.
• From 1 August 2020, employers are to pay employer’s National Insurance Contributions and Pension contributions. This can no longer be reclaimed through the Coronavirus Job Retention Scheme. For the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
• From 1 September 2020, employers will only be able to claim 70% of salary (up to a maximum of £2,190.00) and will be required to pay employer’s National Insurance Contributions and Pension contributions and top up wages to 80% (dependant on the agreement between employer and employee). For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
• From October 2020, employers will only be able to claim 60% of salary (up to a maximum of £1,875.00) and will be required to pay employer’s National Insurance Contributions and Pension contributions and top up to 80% (dependant on the agreement between employer and employee). For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.
• Employers will need to have an agreement in writing with the employee confirming the flexible furloughing arrangement.
• The Coronavirus Job Retention Scheme will close on 31 October 2020.
We appreciate that there will be many questions and further detail on the scheme is to be published on 12 June 2020.
How will this affect your business? Do you think the “flexible furlough” scheme will work for you? Get in touch with our employment law solicitors or our HR consultants to discuss your options!
