On 29 May 2020, the Chancellor announced some changes to the operation of the Coronavirus Job retention Scheme as the coronavirus (COVID-19) lockdown is eased and funding under the scheme is gradually withdrawn. This announcement included the closure of the scheme to new entrants from 30 June 2020 and the introduction of a Flexible Furlough scheme from 1 July 2020.
Employers should be aware that whilst the scheme closes to new entrants on 30 June 2020, as the minimum length for a period of furlough is three weeks, if any employee is to be furloughed under the scheme for the first time, then this must be done by 10 June 2020 for the employer to be eligible to claim for them under the scheme. Employers who have employees they wish to furlough but have not yet done so, must keep a careful record to show that the employee was furloughed on or before 10 June. From 1 July 2020, employers that have previously used the scheme will continue to be able to make claims, but only for employees who have previously been furloughed for at least the minimum period of three weeks up to 30 June 2020.
Under the Flexible Furlough scheme, employers will have the option of allowing Furloughed workers to return to work on a part time basis from 1 July 2020 but will still be able to claim for employee’s wages under the Coronavirus Job Retention Scheme for the normal hours that they do not work and remain on Furlough. The Government has advised that further details on “flexible furloughing” will be published on 12 June 2020.
In addition to these changes, it was confirmed that until 31 July 2020, the Scheme will provide a grant to cover the lower of 80% of an employee’s regular wage or up to a maximum of £2,500 per month, together with the associated employer National Insurance contributions and minimum automatic enrolment employer pension contributions on the subsidised wage. However, from August 2020, payments from the scheme will taper and employers will have to contribute to costs as follows:
- In August 2020, the Scheme will still cover 80% of pay, subject to the £2,500 cap. However, the employer will be responsible for paying the employer NICs and employer pension contributions.
- In September 2020, the Scheme will cover 70% of pay, subject to a pro-rata cap of £2,187.50, and employers will be required to contribute a minimum of 10% of the employee’s wage costs. The employer will be responsible for the employer NICs and pension contributions.
- In October 2020, the Scheme will cover 60% of pay, subject to a pro-rata cap of £1,875, and employers will be required to contribute a minimum of 20% of the employee’s wage costs. The employer will be responsible for the employer NICs and pension contributions.
The Scheme will then end on 31 October 2020.
More information regarding the scheme changes, click here.