Coronavirus Job Retention Scheme
The Government has announced further information about the Coronavirus Job Retention Scheme extension, allowing for more flexibility in the coming months.
There are three principal changes that have been announced to the Job Retention Scheme. In summary, these are as follows:
- From 1 July, the scheme will be made more flexible to enable employers to bring previously furloughed employees back part-time and still receive a grant for the time when they are not working.
- From 1 August, employers will have to start contributing to the wage costs of their furloughed employees - which will gradually increase in September and October.
- The scheme will close to new entrants from 30 June. This means that employers will only be able to furlough employees that they have already furloughed for a full three-week period - therefore the final date that an employer can furlough an employee for the first time will be 10 June 2020.
What does this mean?
1. From 1 July 2020: Part-Time Furloughing to be introduced
From 1 July, to help get the economy moving and to get people back to work, business will be able to bring furloughed employees back to work part-time, with the Government continuing to pay 80% of the wages for the normal hours they do not work up until the end of August.
Employers will be able to decide how much or how little the employees need to work and they will be responsible for paying full costs for the hours their employees do work. This removes the minimum time limit on how long employers can furlough employees. However, the following will apply:
- Any working hours need to be agreed between the employer and the employee in writing and must cover at least one week
- Employers will therefore need to report and claim the grant for a minimum of a week
- Employers can choose to make claims for longer periods (e.g. monthly or two-weekly)
- Employers will need to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked
If employees are unable to return to work, or if there is not enough work for them to do, they can stay furloughed and the employer can continue to claim the grant for their full hours as per the existing scheme.
2. From 1 August 2020: Employers to start contributing to furloughing costs
Government support will start to be tapered from 1 August and so employers will need to start contributing for the hours the employee doesn't work as follows:
| Month | % of wages paid by Government | Maximum cap from Government | Employer NICs and Pension Contributions |
% Employer Contribution | Total combined |
| June | 80 | £2,500 | Paid by Government | None required | 80% = maximum cap of £2,500 |
| July | 80 | £2,500 | Paid by Government | None required | 80% = maximum cap of £2,500 |
| August | 80 | £2,500 | Paid by the Employer | None required | 80% = maximum cap of £2,500 |
| September | 70 | £2,187.50 | Paid by the Employer | 10 | 80% = maximum cap of £2,500 |
| October | 60 | £1,875 | Paid by the Employer | 20 | 80% = maximum cap of £2,500 |
Of course, for any hours the employee does work, the employer will be responsible for paying full wages costs and NICS and pension contributions as they normally would.
The cap on the furlough grant will be proportional to the hours not worked.
Many smaller employers have some or all of their employer NIC costs covered by the Employment Allowance so this should reduce the initial impact.
3. From 30 June 2020: No new entrants to the scheme
The scheme will close to new entrants from 30 June. From then onwards, employers will only be able to furlough employees that they have already furloughed for a full 3-week period prior to 30 June. This means that the final date by which an employer can furlough an employee for the first time will be 10 June for the full three-week period to have been completed by 30 June. Employers will then have until 31 July to make any claims in respect of the period to 30 June.
This is what we currently know about the new changes to be brought in - we will continue to update you as and when new information is released to us.
