UPDATE – changes to the Coronavirus Job Retention Scheme
The government has announced a number of changes to the Coronavirus Job Retention Scheme (the “Scheme”). The extension to the Scheme has been welcomed by employers, but the practicalities of operating it are becoming increasingly complex. This article summarises the key developments.
Last date for furloughing staff
The last date on which employers could furlough employees for the first time was 10 June 2020, except for those returning from maternity, shared parental leave, paternity or parental bereavement leave who can be furloughed for the first time after this date.
Relaxation of the Scheme
Initially, those who were furloughed under the Scheme could not do any work for their employer. However, from 1 July 2020 this will change, allowing employers to implement “flexible furlough”. The current minimum furlough period (three weeks) will no longer apply; instead, the new minimum period will be seven days.
“Flexible furlough” will allow employers to bring furloughed employees back for any amount of time and any work pattern, while still being able to claim under the Scheme for the hours which are not worked. For example, if an employee usually works five shifts per week and their employer only requires them to work two, the employee can work two shifts and still be “furloughed” for the other three.
Employees will need to agree to such arrangements in writing and the written agreement should be retained by employers for at least five years.
The government has updated its guidance on how to calculate claims under the Scheme in light of flexible furlough, which is available here. Employers should keep records of their claims and calculations for at least six years.
The closing of the Scheme
The Scheme is due to close at the end of October 2020. Between 1 August 2020 and the end of the Scheme the amount that employers will be able to claim shall change.
- Currently, employers can claim 80% of wages (up to £2,500 per month) and the associated employer national insurance contributions and pension contributions.
- From 1 August 2020, employers will have to pay the associated employer national insurance contributions and pension contributions.
- From 1 September 2020, the Scheme will cover 70% of wages (up to £2,187.50 per month). Employers will have to pay the additional 10% (so the employee still gets 80% up to the original cap of £2,500) as well as the employer national insurance contributions and pension contributions.
- From 1 October 2020, the Scheme will cover 60% of wages (up to £1,875 per month). Employers will have to pay the additional 20% (so the employee still gets 80% up to the original cap of £2,500) as well as the employer national insurance contributions and pension contributions.
Where employers operate “flexible furlough” arrangements, the grant under the Scheme will be pro-rated to reflect the proportion of hours the employee is on furlough compared to their usual hours.
The current global crisis is evolving rapidly, and the rules and guidance for individuals, companies and other entities to manage its implications are similarly fast moving. Notes such as this may be out of date almost as soon as they are published. If you have any questions prompted by this article or on any other matter relevant to you, please get in touch with your usual contact at Forsters.