The Chancellor has announced three changes to the job retention scheme:
1. Part-time furloughing
From 1 July 2020, businesses using the scheme will have the flexibility to bring previously furloughed employees back to work part-time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August.
Employers will decide the hours and shift patterns their employees will work on their return and will be responsible for paying their wages in full while working. This means that employees can work as much or as little as the business needs, with no minimum time that they can furlough staff for.
Any working hours arrangement agreed between a business and their employee must cover at least one week. Businesses can choose to make claims for longer periods such as on monthly or two weekly cycles if preferred.
If employees are unable to return to work, or employers do not have work for them to do, they can remain on furlough and the employer can continue to claim the grant for their full hours under the existing rules.
2. Employer contributions
From August, the government grant provided through the job retention scheme will be slowly tapered.
• in June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance and pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work
• in August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay employers National Insurance and pension contributions.
• in September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay employers National Insurance, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500
• in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay employers National Insurance, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
• the cap on the furlough grant will be proportional to the hours not worked.
Many smaller employers have some or all their employer NIC bills covered by the Employment Allowance so will not be significantly impacted by that part of the tapering of the government contribution.
Around a quarter of CJRS monthly claims relate to wages that are below the threshold where employer NICs and auto-enrolment contributions are due, and so no employer contribution will be required for these furloughed employees in August.
3. Important dates
It is important to note that the scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June.
This means that the final date by which an employer can furlough an employee for the first time will be 10 June for the current three-week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.