Further furlough changes
On 29 May 2020, Chancellor Rishi Sunak announced yet more changes to the Coronavirus Job Retention Scheme (CJRS)!
Key points you need to be aware of are as follows:
- The scheme will close to new entrants on 30 June.
This means that the last date you can start someone on furlough is 10 June. If they do not start furlough by that date, you will not be able to furlough them at all during the remainder of the scheme.
Therefore, if you were planning to furlough some staff who have worked to date to give them some “respite” and bring back others, you would need to start this by 10 June.
- From 1 July 2020, employers can bring furloughed employees back part time, referred to as “flexible furlough”.
We are awaiting more detailed guidance on flexible furlough (expected on 12 June). However, we know so far that:
- employers will be able to bring back any employees previously furloughed and can decide for how long they will be back to work and what shift patterns they will work; and
- employers must agree with employees any flexible furlough arrangements and confirm this agreement in writing, in order to be eligible for the grant.
- The Government contribution to furloughed employees’ wages and costs will reduce from August as follows:
- August - Government will still pay 80% wages (capped at £2,500), but businesses must pay employer National Insurance and pension contributions.
- September - Government will pay 70% of wages (capped at £2,187.50). Employers must pay 10% of wages (to make up 80% total, up to a cap of £2,500) plus employer NICs and pension contributions.
- October - Government will pay 60% of wages (capped at £1,875). Employers must pay 20% of wages (to make up 80% total, up to a cap of £2,500) plus employer NICs and pension contributions.
The following table should be used as a quick reference guide over the next few months.
|
|
June |
July |
August |
September |
October |
|
Government contribution: Employer NICs and pension contributions
|
Yes |
Yes |
No |
No |
No |
|
Government contribution: Wages
|
80% up to £2,500 |
80% up to £2,500 |
80% up to £2,500 |
70% up to £2,187.50 |
60% up to £1,875 |
|
Employer contribution: Employer NICs and pension contributions
|
No |
No |
Yes |
Yes |
Yes |
|
Employer contribution: Wages
|
No |
No |
No |
10% up to £312.50 |
20% up to £625 |
|
Employee receives
|
80% up to £2,500 per month |
80% up to £2,500 per month |
80% up to £2,500 per month |
80% up to £2,500 per month |
80% up to £2,500 per month
|
- In light of the reducing Government contribution, employers need to start considering now whether:
- you want to bring some furloughed staff back part or full-time, for example, if their contribution to the business outweighs the wages grant you will be losing; and/or
- whether you may need to make some furloughed staff redundant before you start incurring costs in respect of them.
Watch this space!
A key point which needs clarifying is how payments will work where someone is furloughed part-time and working part-time. For example:
An employee usually earns £3,000 per month and is brought back from furlough in July to work 50% of their hours.
The employer will have to pay them £1,500, but how much will the Government pay? There appears to be two options:
- £1,500 - i.e. the amount of normal wages the employee is losing due to being furloughed 50% of the time; or
- £1,000 - to take the employee to the wages cap that month.
We expect it will be the latter but will let you know as soon as we do.
If you have any questions, please do not hesitate to contact Sarah Lee or another member of BPE’s Employment Team.
These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.
