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The Furlough Scheme - Changes from 10 June to 31 October 2020 - and Beyond

View profile for Marina Vincent
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The Coronavirus Job Retention Scheme (CJRS) was introduced on 1 March 2020 and allowed employers to furlough staff, and claim 80% of their wages (capped at £2,500) from the Government.  The Scheme will end on 31 October 2020. 

We have seen various changes to the Scheme over recent weeks, and this article explains the most recent changes with some key dates.

As with our previous articles we must make it clear that the information in this article is general and is based on initial guidance issued by HMRC.  We are waiting for updates to the Treasury Direction and the Employer's Guidance for full details.

Newly Furloughing Staff

You will not be able to newly furlough staff after 10 June 2020, and any that are furloughed for the first time up to or on that date must be furloughed for at least three weeks.

If you have staff already on furlough before that date, they can remain on furlough, subject to changes in the Scheme.

Part-Time work from 1 July 2020

Up until 30 June 2020, any furloughed staff cannot do any work for you.  From 1 July 2020 (the Government had previously said that this would be from 1 August) you will be able to bring staff back to work part time.  You will have to pay them full pay for any time they work for you, and you will not be able to claim any of this back from the Scheme.  They will be able to remain on furlough for the balance of their normal hours and you will be able to claim back 80% of their pay for this balance period. The new furlough period must be a minimum of one week (currently for an employer to make a claim an employee must be furloughed for a minimum of 3 weeks).

You must agree the working hours with your employee and this must be confirmed in writing to the employee.  When claiming from the Scheme, you will have to report on and claim for a minimum of one week and you will be required to confirm the employees normal hours of work, and the actual hours worked.

Changes in the Government Contribution

Until the end of July 2020 the Government will continue to pay 80% of normal pay up to a cap of £2,500 plus employers NI and pension contributions.  If the employee is working part time, this will only apply to their non-working hours pay.

From August 2020, employers will have to pay employers NI and pension contributions, which will not be reimbursed by the Scheme.  We understand from HMRC that this will amount to approximately 5% of their gross employment costs that would have been incurred if the employee had not been furloughed.

From September 2020 the 80% contribution will drop to 70% to a maximum of £2,187.50 for the hours the employee does not work.  Employers will have to pay the 10% difference to the employee to make the total up to the cap of £2,500, proportionate to the hours the employee does not work.

From October 2020, the Government contribution will drop again to 60%, and again employers will have to make up the difference to a cap of £2,500, as with September, proportionate to the hours the employee does not work.

Redundancies

For some employers, even the CJRS will not be enough to protect their businesses fully and they may have to consider redundancies.

If you are considering redundancies, remember that anyone who has worked for you for 2 years or more (including allowing for at least 1 weeks’ notice) will be entitled to a statutory redundancy payment.  They will also be entitled to be paid for their notice period and any accrued holiday, and possibly other benefits.

Also, you will need to have followed a fair redundancy process, including consultation and consideration of suitable alternative employment.  If you do not follow a fair process, this could be found to be an unfair dismissal, giving the employee the right to make a claim for compensation. 

Even if an employee has not been employed by you for 2 years, you still need to select them for redundancy on a fair basis.  An employee cannot claim unfair dismissal if employed for less than 2 years, but they can bring a discrimination claim at any point from the start of their employment.  For further advice, please contact Marina Vincent at our offices

The Furlough Scheme - Changes from 10 June to 31 October 2020 - and Beyond

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