We love how the Chancellor likes to make his detailed announcements at 5pm on a Friday!
However, we will forgive him as there was a small piece of good news for employers. This is that the widely-anticipated tapering provisions for furlough are more gradual (and thus more generous to employers in terms both of money and latitude for delaying hard decisions) than had been rumoured.
We have summarised the key changes below, but as always, if you have any questions, please do not hesitate to contact us on 01656 336097 or [email protected].
FLEXIBLE FURLOUGHING
From 1 July 2020, employers will be able to bring furloughed staff back to work for any amount of time and on any shift pattern, but continue to be able to make a claim under the CJRS for any normal hours not worked by them (please note the words ‘normal hours’). When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of a week. We recommend that you keep rigorous records of all hours worked and not worked and that these are retained for audit purposes should you need to defend your claims.
Employers must agree with employees any new flexible working arrangements and confirm that agreement in writing.
Further guidance on “flexible furloughing” will be published on Friday 12 June (probably at 5pm!).
CLOSURE TO NEW ENTRANTS FROM JULY
The CJRS will be closed to new entrants from 30 June. From this date onwards, employers will only be able to furlough employees who have already been furloughed for a full three-week period prior to 30 June.
An important date to note then is the 10th June. This is the final date by which employers can furlough any individual employee for the first time (so that three-week minimum period can be completed by 30th).
EMPLOYER CONTRIBUTIONS TO WAGE COSTS
As highlighted by the Chancellor a couple of weeks ago, employers will be required to make a growing contribution to wage costs for furloughed staff, although this is being introduced more gradually than many expected. The announcement says that the caps below will be proportional to the hours worked, so if your employee works half a week, for example, you can only claim £1,250 in respect of the unworked period, not £2,500.
See table below for a summary of the new rules.
|
June 2020 |
No changes to scheme |
|
July 2020 |
The government will continue to pay 80% of wages up to a cap of £2,500 as well as employer National Insurance Contributions (NICs) and pension contributions for any hours the employee has not worked. Employers will have to pay employees for any actual hours worked by them and cannot claim under the CJRS for those hours |
|
August 2020 |
The government will continue to pay 80% of wages up to a cap of £2,500 The change is that employers will now be required to pay the employer NICs and pension contributions. |
|
September 2020 |
The government will pay only 70% of normal wages up to a cap of £2,187.50 for any hours the employee does not work. Employers will be required to pay employer NICs and pension contributions. The change is that the employer also pays 10% of wages to take them to the current 80%, still subject to the same cap of £2,500 |
|
October 2020 |
The government will pay only 60% of wages (new bit) up to a cap of £1,875 for any hours the employee does not work. Employers will be required to pay employer NICs and pension contributions and 20% of wages to make up that 80% total, again subject to the £2,500 cap |
At this stage, we believe that the CJRS will close on 31 October 2020.
