You will no doubt have seen the Chancellor’s announcement on Friday 29th May 2020 regarding the next stages of the Coronavirus Job Retention Scheme (CJRS) and how this will affect the Furlough Leave Scheme. We have taken the information below from the HMRC guidance and hope that it is helpful for you in planning your next steps in relation to furloughing employees and getting your business going again.
Flexible furloughing
- From 1 July 2020, you’ll 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; we are awaiting the detailed guidance, hopefully, on 12th This flexibility comes a month earlier than previously announced to help people get back to work.
- You can decide the hours and shift patterns that your employees will work on their return and you will be responsible for paying their wages in full while working. This means that employees can work as much or as little as your business needs, with no minimum time that you can furlough staff for.
- Any working hours arrangement that you agree with your employee must cover at least one week and be confirmed to the employee in writing
- When claiming the CJRS grant for furloughed hours, you will need to report and claim for a minimum period of a week. You can choose to make claims for longer periods such as on monthly or two weekly cycles if you prefer. You will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.
- If your employees are unable to return to work, or you do not have work for them to do, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules.
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 (ER NICs) and pension contributions for the hours the employee doesn’t work – employers will have to pay employees full pay for the hours they actually work
- In August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed
- 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 ER NICs, 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 ER NICs, 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.
If you are a smaller employer, some or all of your employer NIC bills will be covered by the Employment Allowance, so you should 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.
Important dates
It is important to note that the scheme will close to new entrants from 30 June. From this point onwards, you will only be able to furlough employees that you have furloughed for a full three-week period prior to 30 June.
This means that the final date that you 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.
Reading the guidance it is unclear whether you can bring employees off furlough and then re-furlough them but we think that you will be able to do this as the guidance refers to “previously” furloughed employees; however we await the further guidance on 12th June as to whether this is confirmed.
Guidance and support
We are constantly updating and adding to our Coronavirus Dropbox, support for getting your business going is available by signing up to our Advice Line.
Sadly, a number of our clients are having to make redundancies and we are here to support you with that process to minimise the risks of not following the correct procedures, please do call or email us for advice and support on this or any other matter.
