News & Views

How the furlough scheme is changing


What is clear from the Government’s latest announcement is that from August 2020 they will be asking employers to start to share the burden of paying furloughed employees on a staggered basis.

What this means in practice is:

  • Up until the end of the July 2020: The Government will continue to pay 80% of wages up to a cap of £2,500, as well as employer National Insurance and pension contributions.
  • From August 2020: The Government will pay 80% of wages up to a cap of £2,500. Employers will be required to pay employer National Insurance and pension contributions.
  • From September 2020: The Government will pay 70% of wages up to a cap of £2,187.50. Employers will pay employer National Insurance and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.
  • From October 2020: The Government will pay 60% of wages up to a cap of £1,875. Employers will pay employer National Insurance and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.

What is “flexible furloughing”

From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back into the workplace on a part time basis.

Up until now, employees had to be furloughed for a minimum of 3 consecutive weeks. However, from 1 July, employers will only need to report and claim for a minimum period of one week. This is different to the previous position under the scheme, as whilst the minimum claim period is now 1 week, the employee does not appear to have to be furloughed for that entire week.

The aim is to help bring people back into the workplace on a flexible basis, with businesses able to decide the hours and shift patterns their employees will work on their return. Broadly, it appears that from 1 July, employers will be able to claim a pro rata’d amount of salary, based on the proportion of the employee’s normal working hours which are spent on furlough during that period.

Of course, employers will also be responsible for paying their employees’ wages while they are in work and not on furlough leave and so this strategy ultimately depends on whether the business has enough work for its employees to do, in order to justify bringing them back into the workplace.

Important dates and points to note:

  • The job retention 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 3 week period prior to 30 June.
  • What this means in practice is that the final date by which an employer can furlough an employee for the first time will be 10 June, in order for the current 3 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.
  • Further guidance is said to be expected from the Government on the 12 June 2020.

If you have any questions in relation to this article or Employment law generally, please do not hesitate to contact a member of the Employment team at Sherrards Solicitors, who will be happy to assist you.

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