This is a summary of the key changes to the Coronavirus Job Retention Scheme (CJRS) announced by Chancellor Rishi Sunak on Friday 29th May 2020. The article explains important information regarding cut off dates and flexible furlough.
What is the furlough cut off date?
10th June is the last date an employer can furlough an employee for the first time. Don’t be misled by the fact that the Scheme closes to new entrants on 30th June 2020. Employees need to have been furloughed for a full 3 weeks before the 30th June, which is why the cut off date is 10th June.
Changes to employer’s furlough contributions
June and July: No change. Employers can continue to claim back 80% of wages up to a cap of £2,500 per month, plus employer National Insurance and pension contributions.
August: Employers can continue to claim 80% of wages up to a cap of £2,500 per month, but must start paying employer National Insurance and pension contributions.
September: The government will now pay 70% of the salary of a furloughed employee, up to a maximum cap of £2,187.50. Employers must top up salary to at least 80% up to a cap of £2,500 and pay National Insurance and pension contributions.
October: The government will pay 60% of salary up to a maximum cap of £1,875. Again, employers must top up salary to at least 80% up to a cap of £2,500 and pay employer National Insurance and pension contributions.
The Chancellor indicated that the scheme will not be extended beyond 31st October 2020.
Flexible Furlough Scheme
From 1st July employers can bring back furloughed employees on a part time basis and still claim under the CJRS for their normal hours not worked.
HMRC will be publishing further guidance on the ‘Flexible Furlough Scheme’ (FFS) on 12th June. We expect the Guidance to be complicated. This is what we understand from the government announcements so far:
- Flexible furlough will mean that employers can agree with employees to work part time to suit business needs.
- Any part time work, including working hours and shifts patterns, will need to be agreed with employees and confirmed in writing.
- Employers will need to keep clear records of hours actually worked and will be required to report this information to HMRC as part of their CJRS application, as well details of normal hours that have not been worked. The minimum claim period required will be one week.
What effect will these Furlough Scheme changes have?
The CJRS has undoubtedly helped many employers retain their workforce during the pandemic but over the next few months many will struggle to meet those extra financial contributions making redundancies likely if not inevitable. Employees must face the unwelcome fact that they can be made redundant whilst on furlough leave. Employers must still follow a scrupulously fair redundancy procedure to avoid employment tribunal claims for unfair dismissal. Both should take legal advice when they need it.