Having pre-warned the public that significant changes would be made to the ‘Furlough’ scheme, the Government released the detail on 29 May 2020, and there was quite a lot more to it than expected.
These are important changes, particularly the dates by which certain parts will be implemented and also by which no further employees can be furloughed.
We were already aware that changes would include the ability to be able to bring back certain employees to work part-time but this will be available from 1 July 2020 rather than August, as was expected. The Government will continue to cover 80% of the cost of any normal hours these employees do not work and that will stay the case until the end of August. The employees brought back to work part-time can work as little or as much as you decide. You will continue to pay their wages in full but from July you will receive the grant for the hours not actually worked.
There are certain conditions that you will need to comply with when bringing back furloughed staff to work part-time. Any working hours that you agree with the employee must cover at least one week and must be confirmed in writing with the employee. Any claim for the CJRS grant will need to be for at least one week and you will be required to submit details of the hours usually worked in that claim period and those actually worked.
If there continues to be no work for your furloughed employees, they can remain that way and you can continue to claim the grant to cover their usual working hours.
Increased Employer Contributions
It was also intimated that employers would soon be required to contribute a higher proportion for furloughed employees, and the figures have now been confirmed. They will be implemented over the next five months in the following manner:-
June and July – The government will pay 80% of the wages of an employee subject to a maximum of £2,500 per month together with any employers national insurance contributions and pension contributions. Employers will pay employees for the hours they have worked.
August – The government will continue to pay 80% of the wages subject to the £2,500 maximum but will no longer pay the employers national insurance and pension contributions. On average this will account for 5% of the total employment cost of an employee which the employer will now have to cover.
September – The government will now pay only 70% of the wages of an employee subject to a maximum of £2,187.50 per month. Employers will now pay the employers national insurance, pension contributions and 10% of the wages (which makes up 80% of the total up to a cap of £2,500).
October – The government contribution will drop to 60% with a monthly cap of £1,875 for the hours an employee does not work. This means employers will need to pay the employers national insurance, pension contributions and 20% of the wages to make up the 80%.
For many employers, the fact that employers national insurance will need to be paid may not be an immediate issue as there will still be the Employers Allowance to claim, and also many employees are paid at levels which fall below the requirement to pay employers national insurance or auto-enrolment pension contributions.
Restriction of the Scheme
A very important part of the new announcement was that the scheme will close to new entrants from 30 June, and to be able to join by then a new entrant will need to have been furloughed for at least a three week period. So this is a roundabout way of saying that the very last date that you will be able to furlough an employee will be 10 June and that will need to be for a full three weeks.
June 2nd, 2020