Furlough Scheme Changes
Tuesday 2nd June 2020
Furlough Scheme Changes mean employers should review their use of the scheme BEFORE 10 June 2020.
On Friday 29th May the Chancellor set out more details on how the Coronavirus Job Retention Scheme (CJRS) will continue.
The three key changes are:
- In a major and welcome change, from 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time. This is a month earlier than previously announced to help support people back to work. Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them – and will be responsible for paying 100% of their wages while in work.
- From August 2020, the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work. That means that for June and July the government will continue to pay 80% of people’s salaries. In the following months, businesses will be asked to contribute a modest share, but crucially individuals will continue to receive that 80% of salary covering the time they are unable to work.
- Closure to new entrants from 30 June means employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June, i.e. from 10 June.
What does this mean practically?
June and July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.
August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.
Closure of Scheme to New Entrants from July & other essential points to note for planning purposes
The scheme will close to new entrants from 30 June. BUT – IMPORTANT NOTES:
- Employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June – this means that the final date by which an employer can furlough an employee for the first time will be the 10 June, in order for the current three-week furlough period to be completed by 30 June.
- Employers will have until 31st July to make any claims in respect of the period to 30 June.
- From 1 July the scheme will only be available to employers that have previously used the scheme in respect of employees they have previously furloughed.
- From 1 July, claim periods will no longer be able to overlap months, employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this going forward. This is necessary to reflect the forthcoming changes to the scheme.
- The number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim under the current CJRS.
- Employers can continue to make claims in anticipation of an imminent payroll run, at the point payroll is run or after payroll has been run.
- Employers will be able to make their first claim under the new scheme from 1 July.
For part time return from furlough, employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked. Employees who believe they are not getting their 80% share can also report any concerns to the HMRC fraud hotline. HMRC will not hesitate to take action against those found to be abusing the scheme.
The government announcement makes clear that further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June.
For specific advice on this, or any orther employment related issue, please contact one of our employment law experts.