On 29 May 2020, the government announced changes to the Coronavirus Job Retention Scheme, which underpins the current practice of furloughing employees, and runs until 31 October 2020.
The Scheme will close to new entrants on 30 June 2020. Employers will only be able to furlough workers who they have furloughed under the scheme for a full three-week period at some time prior to 30 June 2020 – this means any workers not currently furloughed, must be by 10 June 2020 if they are to be eligible.
Employers will have the flexibility to ask their employees to return to work on a part-time basis from 1 July 2020. Employers must agree any working arrangements with the workers, which should be in writing. The employer will be responsible for paying full remuneration for the period that the individual works, with the remaining non-working time covered by the Scheme.
By way of illustration, a worker who returns to work for 65% of the week, should receive 65% of their normal remuneration to cover their working time. In addition, the employer claims 35% of the capped figure recoverable under the Job Retention Scheme, which tapers down, to cover the period of partial furlough, which must also be paid to the employee.
The tapering of the Scheme means that employers will have to contribute to the wages of furloughed workers from 1 August 2020:
- June 2020 and July 2020 – the government will pay the existing rate of 80% of wages up to a cap of £2,500 as well as employer national insurance and pension contributions for the hours not worked;
- August 2020 – the government pays 80% of wages (£2,500 cap), but, employers must pay the employer national insurance and pension contributions for the unworked period;
- September 2020 – for the unworked period, the government pays 70% of wages (£2,187.50 cap), whilst employers pay the employer national insurance and pension contributions and the extra 10% of wages (£312.50 cap);
- October 2020 – for the unworked period, the government pays 60% of wages (£1,875 cap), whilst employers pay the employer national insurance and pension contributions and 20% of wages (£625 cap).
As explained in our earlier article, where an employee is partially furloughed, the above caps are pro rata.
Employers can make their first claim under the new Scheme from 1 July 2020. They will be required to submit the usual hours that the individual would be expected to work in a claim period and the actual hours worked to HMRC. The claim period is now a minimum of one week and the periods will no longer be able to overlap months. Employers can continue to make claims in anticipation of an imminent payroll run, at the point payroll is run or after payroll has been run.
Employers are reminded that they should only claim under this scheme if their operations have been severely affected by COVID-19, whilst furlough also needs to result from COVID-19. The Scheme cannot be used for other purposes. Claims are being checked to make sure that they do not contain dishonest or inaccurate information and an online portal is being put in place for the public, including employees, to report suspected fraud. Employers found incorrectly using the scheme will be asked to repay the grant and criminal action may be taken.
