COVID-19: Updates to the Furlough Scheme – Guidance for employers

COVID-19: Updates to the Furlough Scheme – Guidance for employers

On 12th May 2020, Chancellor Rishi Sunak confirmed that the Coronavirus Job Retention Scheme (commonly referred to as ‘Furlough’) would be extended to 31st October 2020 enabling employers to continue to put their staff on Furlough Leave for a further 4 months.

On Friday 29th May the Chancellor confirmed how the scheme will work moving forwards. Employers should bear in mind the following Chancellor Rishi Sunak confirmed that the Coronavirus Job Retention Scheme

Deadline for placing employees on Furlough Leave

The Chancellor has announced that the scheme will close on 30th June 2020. Employers should bear in mind that employees must be put on Furlough Leave for a minimum period of 3 weeks and so the last date that an employee can be placed on Furlough Leave will be 10th June 2020 in order for the period to be completed by 30th June 2020.

Flexibility

From 1st July 2020, employers will be able to Furlough employees on a part time basis. Previously, the employees were not able to do any work for the employer whilst on Furlough Leave. However, only those employers who are already enrolled on the scheme will be able to benefit from this. It will also only apply to employees who have previously been on Furlough Leave. This means that an employer wishing to benefit from being able to Furlough employees on a part time basis, should ensure that those employees have already been Furloughed before the deadline next week (10th June 2020).

Government Contribution

Currently, the Government pays 80% of the employee’s wages up to a cap of £2500 together with the employer national insurance contributions (ER NICs) and pension contributions. Employers are not required to contribute anything, so long as they have the employee’s agreement not to ‘top up’ the wages to their contractual rate. This scheme will continue throughout June and July.

In order to finance the extension of the scheme, the government will be introducing the following changes:

  • In August, the government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions;
  • In September, 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 wages to make up 80% total up to a cap of £2,500;
  • In October, 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 wages to make up 80% total up to a cap of £2,500.

Employers should still be aware that they must have the employee’s agreement to accept a reduced wage.

Closure of the Scheme

The scheme will come to an end on 31st October 2020.

How we can help

Neves’ employment specialists can help you with questions which you may have about your employees. Call us on 0330 0945 500, email info@nevesllp.co.uk or complete our Online Contact Form and we'll get back to you.