Extension to Furlough: the devil is in the detail01 Jun 2020 // Insights
Employment Associate Fiona Mendel details the changes to the Coronavirus Job Retention Scheme announced Friday.
The widely anticipated announcement providing details of the extension to the Coronavirus Job Retention Scheme (CJRS) was announced by the Chancellor on Friday evening, 29 May 2020.
The key parts of the announcement were:
- 1 July 2020: ‘flexible furloughing’ is being introduced, a month earlier than originally planned, whereby employees will be able to work part-time and be furloughed part-time. Businesses will be able to determine how that will work in terms of the time split and will be responsible for paying their employees wages while in work.
- June and July 2020: the existing scheme will continue whereby the Government will pay 80% of wages up to £2,500 per month as well as employer National Insurance and pension contributions. Employers are not required to pay anything.
- August 2020: the Government will continue to pay 80% of wages at the same limit but employers will need to pay National Insurance and pension contributions and will no longer be able to reclaim this under the CJRS.
- September 2020: the Government will pay 70% of wages up to a cap of £2,187.50 per month and employers will need to contribute 10% of the wage cost to make up the 80% cap of £2,500. Employers will need to pay employers National Insurance and pension contributions.
- October 2020: the Government will pay 60% of wages up to a cap of £1,875 and employers will need to contribute 20% of the salary cost to make up the 80% cap of £2,500. Employers will need to pay employers National Insurance and pension contributions.
Further key details that have been provided:
- Employers must agree with their employee any new flexible furloughing arrangement and confirm that agreement in writing in order to be eligible for the grant.
- Employers can only claim the grant for hours their employees are not working.
- For hours worked, employees will be paid by their employer subject to their contract of employment. Employers will be responsible for paying tax and National Insurance contributions due on those amounts.
- The furlough scheme will close for new entrants on 30 June 2020 and therefore employers wanting to furlough anyone new, will need to do so before 10 June 2020 to meet the minimum 3 week period required before the application window closes.
- Employers will be required to submit details on the usual hours an employee would be expected to work in a claim period and actual hours worked.
- Employers will need to report and claim for a minimum period of a week for grants to be calculated accurately. This is a minimum period and those making claims for longer periods (such as monthly cycles) will be able to do so.
- Employers can continue to make claims in anticipation of an imminent payroll run, at the point payroll is run or after it has been run.
- Further guidance on flexible furloughing and how employers should calculate claims will be published by the Government on 12 June 2020.
Whilst the furlough scheme has been a lifeline for millions of people and businesses, the Government has confirmed there will be no more changes or extensions to the current scheme.
Should you have any queries on the above or require any employment related advice, please contact Fiona Mendel at firstname.lastname@example.org or on 020 7725 8033 or Head of Employment, Helen Crossland at email@example.com or on 020 7725 8034
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