Bath Business Blog: Sean McDonough, Mogers Drewett employment partner. Furlough scheme changes explained

June 11, 2020
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Chancellor Rishi Sunak recently announced more details on the extension of the Coronavirus Job Retention Scheme (CJRS), including bringing forward by a month the option to bring furloughed employees back part time. 

With so much information coming out from the government on the scheme, Mogers Drewett employment partner Sean McDonough here highlights the key changes and, more importantly, the key deadlines for those changes over the next few months to enable employers to prepare to return employees back to work efficiently and effectively. 

June

For this month and next the government will continue to pay 80% of wages (subject to the monthly cap of £2,500), employer National Insurance (NI) and pension contributions for any furloughed employees provided they are not working for their employer.  

Employers will remain responsible for paying 100% of wages for employees that are working unless short-term working has been agreed.

Importantly, the CJRS will close to new entrants from June 30. After that date, employers will only be able to furlough employees that have previously been furloughed for a full three-week period prior to June 30. So, employers still considering using the CJRS scheme must have furloughed an employee for the first time in order to meet the qualifying criteria by last Wednesday (June 10).

July

From the July 1 employers will have the flexibility to bring previously furloughed workers back to work part-time. The CRJS will continue to pay for any hours unworked while the employer begins to pays for hours worked. To be eligible for the CRJS for part-time staff, employers must agree new flexible arrangements  with the employee  and confirm that agreement in writing.

In preparation for the start of tapering of the CJRS from August there will be changes to the claim periods. From July 1, claim periods can no longer overlap calendar months and employers will be able to report and claim for a minimum period of one week rather than three weeks.

August

A tapering of the CJRS will begin. During August the government will continue to pay 80% of wages up to the £2,500 cap for furloughed employees but employers will take over  payment of employer NI and pension contributions. 

September

In September, the government contribution will reduce to 70% of wages up to a cap of £2,187.50  for furloughed employees. Employers will continue to pay employer NI and pension contributions and, additionally, must now pay 10% of wages to make up to 80% of the total wages, up to the cap of £2,500. 

October

Finally, in October the government contribution will lower again to 60% of wages, up to a cap of £1,875 for furloughed employees. Employers will continue to pay employer NI and pension contributions and will have to pay 20% of wages to make up to 80% of the total wages, up to the £2,500 cap.

In is important to note that the cap on the furlough grant will be proportional to the hours not worked - so if an employee is not working for 50% of his or her normal working hours the cap would be £1,250 during July and August, £1,093.75 in September and £937.50 in October.

Further guidance on flexible furloughing and how employers should calculate claims is scheduled to be published today, June 12.

 

 

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