Changes to the Coronavirus Job Retention Scheme
On 1 July 2020, the Government issued an update to their Coronavirus Job Retention Scheme to enable employers to “flexibly” furlough employees. This means that from 1 July 2020:
Employers will be able to bring back employees to work for any amount of time, and any work pattern; and
Still be able to claim the furlough grant for the hours that the employees do not work (i.e. the hours that they are still furloughed).
If you flexibly furlough employees, you’ll need to agree this with the employee (or reach collective agreement with a trade union) and keep a new written agreement that confirms the new furlough arrangement for a minimum period of 5 years.
The changes aims at gradually winding down the Coronavirus Job retention Scheme grant. Government’s timetable for introducing the changes is summarised below:
For June and July, Government will pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee is on furlough. Employers will have to pay employees for the hours they work.
For August, Government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay ER NICs and pension contributions for the hours the employee is on furlough.
For September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
For October, Government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
The table below shows Government contribution, required employer contribution and amount employee receives where the employee is furloughed 100% of the time.
Wage caps are proportional to the hours not worked.
Employers will continue to able to choose to top up employee wages above the 80% total and £2,500 cap for the hours not worked at their own expense if they wish. Employers will have to pay their employees for the hours worked.
Job retention Bonus
Government will introduce a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021. Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021. Payments will be made from February 2021. Further detail about the scheme will be announced by the end of July.
Finally, should you wish to talk through the above and/or find out more about the other Government financial supports available, please do not hesitate to contact us at enquiries@alexandrwalker.com or on 020 8191 9867.