Coronavirus: What’s next? Flexible Furlough
[ Including: 12 June 2020 Update ]
Following the Chancellor’s announcement on Friday 29th May and subsequent update of the 12 June 2020, the Chancellor has confirmed the following updates to the Coronavirus Job Retention Scheme (CJRS) – Furlough Scheme:
- The scheme would remain open until October
- Furloughed employees will still receive 80% of their pay as a minimum (capped) but employers will increasingly have to help fund the scheme (see below)
- From 1st July a new Flexible Furloughing option will be introduced.
The implications for employer contributions
June and July
The scheme will continue as before with the government paying 80% of wages up to a cap of £2,500 as well as employer National Insurance and pension contributions for the hours the employee doesn’t work. Employers will have to pay employees for any hours they work (in July).
80% of pay will still be subsidised by the government up to a cap of £2,500, but employers will be asked to pay employers NI and pension contributions ie for the average claim approximately 5% of total employment costs they would have incurred had the employee not been furloughed.
September and October
Employers to start paying towards cost of furloughed wages:
- September: 70% funded by the government up to a cap of £2,187.50 for the hours the employee doesn’t work. Employers will pay employers NI and pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500
- October: 60% funded by the government up to a cap of £1,875.00 for the hours the employee doesn’t work. Employers will pay employers NI and pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
- The cap on the furlough grant will be proportional to the hours not worked.
The scheme will end on 31st October 2020.
In order to help people get back to work, from 1st July you will now have the flexibility to bring previously furloughed employees* back to work part-time, with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August.
*the scheme will be closed to NEW entrants (with the exception of those on statutory maternity/adoption or paternity leave) on 30th June 2020. Therefore, the final date you can furlough an employee for the first time is 10th June 2020 (to ensure the 3-week minimum claim).
Those on statutory maternity/adoption/paternity leave and who are due to return in the coming months, then the deadline of the 10th June will not apply. It would be unfair and discriminatory for this group of employees to not be able to join the scheme purely on the basis of exercising of a statutory right.
An example of using the flexible furlough scheme and working part time: a full time employee is brought back to work to resume their normal work on 2 days per week and will be paid for those 2 days as normal by the employer and they will be furloughed for the remaining 3 days per week for which 80% grant can be claimed from the government.
This is just an example; you can decide the hours and shift patterns that your employees will work on their return as long as you pay them in full for any hours they are working. There is no minimum time that you can furlough staff for.
Any working hours arrangement that you agree with your employee must cover at least one week and be confirmed to the employee in writing.
If employees are unable to return to work or you do not have any work for them to do, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules.
Flexible furloughing: The Government have announced that with the new flexible furlough scheme, there will be no minimum amount of time that an employee can be on temporary leave. However, any furlough arrangement agreed between employer and employee and reported in a claim to the HMRC must still cover a period of at least one week.
You will have to submit details of the usual hours an employee would be expected to work, and the actual hours worked.
Employers will have until 31st July to make any claims in respect of the period to 30 June.
The self-employment income scheme has also been extended and will be re-opening in August for a final grant; a single instalment of 3 months’ worth of 70% of average monthly earnings up to a maximum of £6,570.
- Flexible Furlough Scheme: https://www.gov.uk/government/news/chancellor-extends-self-employment-support-scheme-and-confirms-furlough-next-steps
- The Coronavirus Job Retention Scheme guide: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
- Check if an employer is eligible to use the CJRS: https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme
For more articles and ongoing updates visit the HR Solutions’ dedicated page ‘Coronavirus Advice and Guidance for Employers’.
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