New furlough scheme announced
The UK government had announced the extension and changes to the Coronavirus Jobs Retention Scheme (CJRS) to October 2020 on 12 May 2020. There was a lot of speculation that businesses would be expected to contribute 20% of the costs of the furlough scheme from 1 August 2020. The government has now provided details on how businesses will be expected to contribute to the scheme if they want to continue benefiting from it going forward. The announcement from Rishi Sunak will have been a welcome surprise to many employers, as the contribution expected from employers is being introduced progressively.
Under the new Scheme, employees on furlough will continue to be entitled to 80% of their salary up to a cap of £2,500 but from August 2020, employers will be expected to contribute to the cost of furlough.
Another notable change is the introduction from July 2020 (one month earlier than previously announced but months after our European friends) of part time furlough: a measure that enables employees to work part time whilst benefiting from the CJRS. We commented on this late introduction in our blog last week: FURLOUGH: IS EUROPE LEAVING BRITAIN BEHIND?
The current scheme is closing to new entrants on 30th June 2020. A changed scheme will then open allowing flexibility to bring your employees back part time while still receiving furlough pay. The main changes are:
- In July 2020, the government will pay 80% of wages up to the cap of £2,500 as well as Employer NI and pension contributions for the hours the employee doesn’t work. Employers will have to pay employees for the hours they work.
- In August 2020, the government will continue to pay 80% of wages up to the cap of £2,500 but the employer will bear the cost of Employer NI and pension contributions on the furlough sums (representing an average of 5% of the gross employment costs the employer would have incurred had the employee not been furloughed). Employers will have to pay employees for the hours they work.
- In September 2020, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will continue to bear the cost of Employer NI and pension contributions and will also be expected to pay 10% of wages to make up 80% of the total up to a cap of £2,500.
- In October 2020: the government will pay 60% of wages up to a cap of £1,875.00 for the hours the employee does not work – employers will continue to bear the cost of Employer NI and pension contributions and will also be expected to pay 20% of wages to make up 80% of the total up to a cap of £2,500.
If you are a smaller employer, some or all of your employer NIC bills will be covered by the Employment Allowance.
These changes have been reflected in the government information on CJRS:
- Guidance: Check if you can claim for your employees’ wages through the Coronavirus Job Retention Scheme .
- Guidance: Check if your employer can use the Coronavirus Job Retention Scheme .
- Guidance: Work out 80% of your employees’ wages to claim through the Coronavirus Job Retention Scheme.
- Acas: Coronavirus: advice for employers and employees .
For some businesses, bearing even the smallest amount of increase in wages costs may make the difference between surviving or not, even with the various streams of funding and grants available. The next few months will see some business making extremely difficult decisions about their survival.
If you would like to discuss furlough or return to work or the implications of the changes to the furlough scheme, we would be happy to help.
For more specific information or to discuss your requirements please call either Amanda Galashan or Julie Calleux at Employease on 03339398741, or email us at email@example.com. This note does not constitute legal advice on any particular situation you may have.
Copyright: Employease 2020