On Friday, Rishi Sunak announced the following three major changes to the Coronavirus Job Retention Scheme
The scheme will close to new entrants from 10 June.
From 1 July 2020, the scheme will be made more flexible to enable employers to bring previously furloughed employees back part time and still receive a grant for the time when they are not working.
From 1 August 2020, employers will have to start contributing to the wage costs of paying their furloughed staff and this employer contribution will gradually increase in September and October.
1. Scheme to close to new entrants
As predicted in our webinar, the last day that employers can place employees on furlough will be 10 June. This is to allow new entrants to complete the mandatory three week furlough period by 30 June 2020. If new entrants do not commence furlough leave by 10 June then they will not qualify for payments under the scheme.
2. Part time furloughing
From 1 July 2020, businesses using the scheme will have the flexibility to bring previously furloughed employees back to work on a part-time, part-furlough basis. Employers will decide how tat hours and shift patterns will work and will be responsible for paying their wages in full while working.
Businesses will need to agree the part time working arrangements with employees individually and it shall need to be recorded in writing.
If employees are unable to return to work, or employers do not have work for them to do, they can remain on furlough and the employer can continue to claim the grant for their full hours under the existing rules.
As stated above, businesses will only be able to ask staff to return on a flexible furlough basis if they have previously been furloughed.
3. Employer contributions
From August, employers will have to contribute towards furloughed pay as follows:
June and July: the government will pay 80% of wages up to a cap of £2,500 per month as well as employer National Insurance contributions and pension contributions for the hours the employee doesn’t work;
August: the government will continue to pay 80% of wages up to a cap of £2,500 per month but employers will pay employers National Insurance contributions and pension contributions;
September: Furloughed employees shall still be entitled to 80% of wages capped at £2,500 per month but the government will only pay 70% of wages up to a cap of £2,187.50 per month for the hours the employee does not work, employers will pay employers National Insurance contributions, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500;
October: Furloughed employees shall still be entitled to 80% of wages capped at £2,500 per month and the government shall pay 60% of wages up to a cap of £1,875 for the hours the employee does not work, employers will pay employer national insurance contributions, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500.
The furlough scheme will close on 31 October 2020.
If you missed our webinar, you can now view a recording online here: https://www.greystone.legal/post/watch-now-update-on-furlough-leave-and-conducting-covid-19-risk-assessments
As ever, please do not hesitate to contact us if you have any queries.