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The Chancellor announced on Friday reforms to the Coronavirus Job Retention Scheme. While we await updates to the Government guidance for the precise details of these changes, here are the key points:
New furloughed employees
The furlough scheme will close to new entrants from 30 June, after this date employers will only be able to claim furlough pay for employees who have already been furloughed for at least one three-week, period prior to 30 June.
Hence 10 June 2020 is the last day employers can place an employee on furlough for the first time in order that they will have been furloughed for three weeks by 30 June.
Flexible furloughing
From 1 July employers will have the flexibility to bring previously furloughed employees back to work part time.
Employers can decide the hours employees will work when they come back. Employers must pay the wages in full for all hours an employee works, the Government will still pay 80% of wages for the days an employee does not work.
Employees will be able to work as much or as little work as the business needs, with the minimum time employers can furlough someone being removed. So for example, an employee could work two days a week at (100%) and be furloughed (80%) for the other three.
The working hours arrangement employers agree with each employee must cover at least one week and be confirmed to the employee in writing, as a temporary amendment to their contract.
When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of a week and will be required to submit data on the usual hours an employee works in a claim period, as well as the actual hours worked.
If employees are unable to return to work, or employers do not have work for them to do, they can remain on furlough and employers can continue to claim the grant for their full hours under the existing rules.
Employer contributions
From 1 August, the government will continue to pay 80% of wages but employers will have to pay the employer's national insurance and employer pension contributions.
From 1 September, the government will reduce its support down to pay 70% of wages up to a cap of £2,187.50 per month . Employers will pay ER NICs, employer pension contributions and 10% of wages to make up 80% for those employees not doing any work
From 1 October, the government will only pay 60% of wages up to a cap of £1,875 per month and employers will pay ER NICs, employer pension contributions and 20% of wages to make up 80% for those employees not doing any work.
The furlough scheme will close on 31 October 2020.
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