01 Jun 2020

Employment

Uncategorized

Update to the Coronavirus Job Retention Scheme (29th May 2020)

On Friday 29th May 2020, the Chancellor announced three significant changes to the job retention scheme (“the Scheme”) and that the Scheme would end as at 31st October 2020. Our Head of Employment Law, Daniel Wilde, explains the key changes that have been announced, as well as providing details on how the scheme will end.

Flexible 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.

It seems that employers will be given discretion about how this part time working will operate. The employer will decide hours and shift patterns, but when the employee is working then the employer must pay the employee’s normal wages for the time actually worked.  The government will not make any contribution on the pay for the hours worked. The employer must also ‘agree’ this work pattern with the employee.

Any working hours’ arrangement agreed between a business and their employee must cover at least one week and be confirmed to the employee in writing. When claiming the CJRS grant for furloughed hours, the employer will need to report and claim for a minimum period of a week. Employers 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 employees are unable to return to work, or there is no work for them to do, they can remain on furlough and the employer can continue to claim the grant for their full hours, subject to the changing financial contributions now announced

Changing financial contribution levels

From August, the grant provided through the Scheme will be tapered.

In June and July, the Scheme will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and minimum auto-enrolment pension contributions for the hours the employee do not work as the Scheme has currently operated to date.

In August, the Scheme will continue to pay 80% of wages up to a cap of £2,500 per employee, but employers will pay employer NICs and pension contributions. This broadly equates to 5% of the normal employment costs.

In September, the Scheme 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 Scheme 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.

Closure of the Scheme to new entrants

It’s important to note that the Scheme will close to new entrants from 30‌‌ June. From this point forward, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30‌‌ June. A previous period of furlough will, we understand, count.

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.

Employers therefore have little time to determine their future workforce requirements if they wish to extend furlough to employees they have not previously furloughed.

Further Advice

For information about how to claim, go to GOV‌.‌‌UK and search ‘Coronavirus Job Retention Scheme’. For further guidance on how to place employees on furlough or agreeing the new flexible part time working arrangements or in relation to any aspect of the furlough scheme, please do not hesitate to contact Daniel Wilde at Harding Evans on 01633 244233 or by email on dw@hevans.com.

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