Furlough Latest – Employer Contributions, “Flexible Furlough” and Other Key Changes
On 29 May 2020, the Chancellor set out key changes to the Coronavirus Job Retention Scheme (“CJRS”) which will take effect over coming months, including a new taper requiring employers to contribute to furloughed salaries from August and detail on the new “flexible furlough” scheme which will apply from July.
We have summarised the key issues for employers below.
What are the changes relating to employer contributions to furloughed salaries?
Employers will be required to start contributing under the scheme as follows:
— June and July: no change – employers can continue to claim 80% of wages up to a cap of £2,500 as well as employer National Insurance and pension contributions.
— From August: employers can continue to claim 80% of wages up to a cap of £2,500. However, employers will need to pay employer National Insurance and pension contributions.
— From September: employers can claim 70% of wages up to a cap of £2,187.50. However, employers will need to pay employer National Insurance and pension contributions as well as 10% of wages to make up the 80% total up to a cap of £2,500.
— From October: employers can claim 60% of wages up to a cap of £1,875. However, employers will need to pay employer National Insurance and pension contributions as well as 20% of wages to make up the 80% total up to a cap of £2,500.
— The CJRS is currently planned to close on 31 October 2020.
What are the changes relating to “flexible furlough”?
From 1 July, employers can bring back to work employees that have previously been furloughed while still being able to claim under the CJRS for their normal hours not worked. The government has stated that:
— Employers will be able to agree on any working arrangements, such as working hours and shift pattern, with previously furloughed employees.
— Employers will still be able to claim under the CJRS for employees’ normal hours not worked but will have to pay in full for any hours worked, and will be responsible for tax and national insurance contributions on those payments.
— To be eligible under the CJRS, employers will have to agree with employees any new flexible furloughing arrangement and confirm that agreement in writing.
— Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June.
— The government has also published this factsheet setting out further details.
What are the other key changes?
The factsheet explains that the CJRS will close to new entrants from 30 June. From this point, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June.
This means 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 three-week furlough period to expire by 30 June.
From 1 July the CJRS will only be available to employers that have previously used it in respect of employees they have previously furloughed.Back to Our Thinking →