The Chancellor has now outlined the tapering of Government support for the Coronavirus Job Retention Scheme in the three months prior to its closure at the end of October.
The Government has outlined its broad plans for winding down the Job Retention Scheme, which it hopes will move in sync with the cautious re-opening of the economy, starting at the beginning of June.
The Chancellor had previously announced that the scheme would remain in place until October, but that the Government would expect employers to make a contribution to the wage costs of furloughed employees for the final three months of the scheme. We now have details of the required level of employers’ contributions, which will rise progressively each month.
The Government has also confirmed that, as from the beginning of July, previously furloughed staff will be able to return to work part-time, but employers will be able to continue to claim under the scheme for the balance of their normal hours. More details of exactly how this will work are expected on 12 June.
Scheme closes to new employees from end of June
The most imminent change is the closure of the scheme to new staff, to pave the way for the amended, more flexible scheme that starts in July.
Because the minimum period of furlough is currently three weeks, the deadline for furloughing new employees is 10 June. All the necessary employment paperwork needs to be in place by 10 June, though employers will have until the end of July to make a claim for June wage costs.
No new employees can be furloughed after the end of June, which means that employers who have not furloughed any staff by 10 June will not be able to access the scheme. In addition, the number of furloughed employees claimed for after 1 July in any one claim period cannot exceed the maximum number claimed for in any one claim made prior to that date.
What will employers have to contribute?
The table below sets out the progressive rise in the minimum employers’ contributions required. Furloughed employees’ entitlement will remain at 80% of their normal wages (up to a cap of £2,500 per month) throughout the final three months of the scheme, for the normal hours that they are not working.
Employers will in effect be contributing a minimum of one eighth of the total wages grant in September, rising to one quarter in October, plus employer’s pension and national insurance contributions. As previously, employers can choose to top up their minimum contribution so that the employee receives 100% of normal wages while they are furloughed.
|Month||Government contribution||Employer contribution|
|August||80% of wages only (no grant for employer national insurance and minimum pension contributions)||Employer NI and pension contributions only|
|September||70% of wages (capped at £2187.50)||10% of wages (capped at £312.50) plus NI and pension contributions|
|October||60% of wages (capped at (£1875)||20% of wages (capped at £625) plus NI and pension contributions|
Furloughed staff can return to work part time from July
A number of important revisions to the scheme will be made from the beginning of July, which the Government hopes will help support a phased return to work as the lock-down is progressively lifted. The key points are as follows:
- Employers will be able bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim under the scheme for their normal hours not worked.
- Employees must receive their normal contractual pay for hours worked (and will receive the furlough grant for normal hours not worked)
- Employers will be able to agree “any working arrangements” with previously furloughed employees.
- When claiming the grant for furloughed hours, employers will need to report and claim for a minimum period of a week.
The Government has said more guidance on flexible furloughing and how employers should calculate claims will be published on 12 June. These are expected to tackle the all-important question of how to calculate what can be claimed under the scheme for hours not worked, as well as how the new arrangements and claims should be documented.
Where can I find out more information?
The Government has published a Fact Sheet which contains some relatively brief information about the planned amendments to the scheme. More detailed information and revised guidance is expected by mid-June.
See the Mills & Reeve FAQ document here for more information about how the scheme currently operates.
Author: David Mills, Partner, Mills & Reeve