Flexible Furlough – What you need to know
In the wake of some normality finally upon us, here is some key information to keep on track with the new changes to the Furlough Scheme (CJRS).
The PM and Rishi Sunak on Friday, 29 May 2020, announced additional changes that the Coronavirus Job Retention Scheme (CJRS), or known as ‘Furlough Scheme’. It is confirmed the scheme will run till its extended period, set to 31st October 2020, with the revamped rules, applicable to the scheme from 01, July 2020.
What you need to know:
Rules of the current CJRS will be applicable till 30th June 2020.
- Employers have reached an agreement with the employees that they are to be ‘furloughed’ under the CJRS.
- Furloughed employees ‘cannot’ undertake any work or be part of the company’s operations while on furlough status, subject to limited exceptions.
HMRC will pay the employer a grant equal to:
- 80% of the furloughed worker’s salary (these payments are capped at £2,500 per month)
- The associated employer’s NIC and minimum automatic employer pension contributions.
- Any ‘top up’ payments are to be solely made by the employers to furloughed workers over and above their entitlements under the scheme.
- On July 1, 2020, furloughed workers can be brought back for work for any amount of time and shifts, while still on CJRS for their normal hours not worked. To claim furlough, employers would be required to report a minimum working period for the week.
- The new scheme closes for new entrants on 30th, June 2020. Meaning employers can only add those employees to the list that would have served at least 3-week furlough period as of 10th June 2020, leading up to 1st of July 2020. Last date of adding any employees to the furlough scheme was 10th June 2020.
- Employers will have until the 31st of July 2020, to make furlough claims in respect to the period off 30th June 2020.
- There will be a phase wise reduction in the financial support on offer by the government
- From September 1st, the grant will decrease to 70% of the employees wage (monthly cap of £2,187.50 applies, which will reduce in proportion to any part-time hours worked) and the employer will be required to pay in the rest to make it up to the 80%
- From 1 October, 2020 the grant will further be reduced to 60% percent of wages (monthly cap of £1,875 applies, which will again reduce in proportion to any part-time hours worked) and the remainder needs to be topped up by the employer.
- Employers will be bearing the expenses of the portion of wages of their furloughed employees’ non-working hours.
- Job Retention grant against NIC and pension contributions cannot be claimed after the 1st of August 2020, by any employer.
- Employers would need to initiate new written furlough agreements with employees who will return to work part time while on furlough.
So… some dates to bear in mind:
- 10th June 2020 – Last day an employee can be furloughed
- 30th June 2020 – Closing date to make furlough claims for any new applicants to the scheme
- 1st July 2020 – Launch of Flexible Furlough
- 1st August 2020 – Employers will need to start paying National Insurance (NI) and pension contributions to any furloughed employee
- 1st September 2020 – Employer will need to contribute 10%
- 1st October 2020 – Employers will need to contribute 20%
- 31st October 2020 – Close date, unless further announcements are made
For any further guidance or advice please join us on 24th June 2020 for a live Q&A session, where we will be happy to take any questions on the above!
Adroit Covid19 Response Team!