On Friday 29th May, the Government set out further clarification of how the Job Retention Scheme is to be amended in the coming months, in order to support businesses returning staff back to work.

The update features improved flexibility to bring furloughed employees back part time from July, and a new taper requiring employers to contribute modestly to furloughed salaries from August

Should you want to review the latest Scheme details yourself please follow this link: www.gov.uk/government/news/chancellor-extends-furlough-scheme-until-october

 

  1. What Has Changed?
    • Flexible furloughing
      • From 1‌‌ July 2020, you will have the flexibility to bring previously furloughed employees back to work part-time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August
      • If your employees are unable to return to work, or you do not have work for them to do, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules.
    • From August 2020, the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work.
      • For June and July the government will continue to pay 80% of people’s salaries;
      • From 1 August onwards, the scheme will no longer cover the cost of employers’ National Insurance nor pension contributions applicable to the grant.
      • In the following months, businesses will be asked to contribute (see below), but crucially individuals will continue to receive 80% of salary covering the time they are unable to work.
    • It is important to note that the scheme will close to new entrants from 30‌‌ June.
      • Employers will only be able to claim under the scheme going forward if they have previously claimed under the pre-1 July scheme.
      • From this point onwards, you will only be able to furlough employees that you have furloughed for a full three-week period prior to 30‌‌ June.
      • This means that the final date that you can furlough an employee for the first time will be 10‌‌ June for the current three-week furlough period to be completed by 30‌‌ June.
      • Employers will have until 31‌‌ July to make any claims in respect of the period to 30‌‌ June.
    • There will be a new maximum limit to the number of staff who can be included on a claim, based upon the maximum staff ever included in a single claim under the original scheme.
    • The Scheme will end on 31 October 2020
    • Further support for employers on how to calculate claims with this extra flexibility will be available by 12‌‌ June, including webinars and detailed online guidance.
      • For information about how to claim, go to GOV‌.‌‌UK and search ‘Coronavirus Job Retention Scheme’.

 

  1. Part Time Working Under The Job Retention Scheme

From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time.

  • Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them;
  • This means that employees can work as much or as little as your business needs, with no minimum time that you can furlough staff for;
  • Any working hours arrangement that you agree with your employee must cover at least one week and be confirmed to the employee in writing
  • The employer will be responsible for paying part time wages whilst employees are in work.

 

  1. How Will The Job Retention Scheme Change Over The Coming Months?

The scheme updates mean that the following will apply for the period people are furloughed:

  • June and July 2020
    • The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions;
    • Employers are not required to pay anything.
  • August 2020
    • The government will pay 80% of wages up to a cap of £2,500;
    • Employers will pay all employer NICs and pension contributions – for the average claim, this is estimated to represent 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • September 2020
    • The government will pay 70% of wages up to a cap of £2,187.50;
    • Employers will pay ER NICs and pension contributions and 10% of furloughed wages to make up 80% total up to a cap of £2,500;
    • For the average claim, this employer contribution is estimated to amount to 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • October 2020
    • The government will pay 60% of wages up to a cap of £1,875;
    • Employers will pay ER NICs and pension contributions and 20% of furloughed wages to make up 80% total up to a cap of £2,500;
    • For the average claim, this employer contribution is estimated to amount to 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.

 

  1. Further Points To Note

There are some other changes that the “new” Scheme introduces:

  • A new minimum reporting period of one week will apply from 1 August 2020.
    • More frequent claims will not be accepted, but the reporting period can be longer.
  • From 1 July, claim periods will no longer be able to overlap months.
    • This is necessary to reflect the forthcoming changes to the scheme.
  • The grant will be based on the same premise as now, so the employee must be paid the lesser of 80% of reference salary and £2,500 per month.
    • The government contribution to the 80% of reference salary is being reduced as the scheme progresses.
  • The new calculation will apply from 1 July to factor in the cost of hours worked to hours furloughed ratio.
    • Employers can claim the grant for the hours their employees are not working calculated by reference to their usual hours worked in a claim period. Further details will be included in future guidance.
    • Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
    • For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.

Barrons has put together a helpful guide to running your business during the coronavirus crisis.