Furlough scheme update
Ending of the scheme
The Coronavirus Job Retention Scheme was originally scheduled to finish at the end of June. This has been extended until the end of October. It is critical for employers to understand the relevant dates and the fine detail. The key dates are outlined below.
The final date by which an employer can furlough an employee for the first time is 10 June. The full furlough scheme closes to new entrants on 30 June but there must be a full 3-week furlough period completed before then for employees to continue to qualify. Employers who have employees they wish to furlough but have not yet done so, must keep a careful record to show that the employee was furloughed on or before 10 June.
Closure to new entrants from 30 June
From 1 July claims are restricted to employers currently using the scheme for employees who they have previously furloughed before 10 June. This means that the only employees who can be furloughed are those who have already completed a full three-week furlough period before 30 June (ie starting on or before 10 June). There is a further deadline of 31 July to make any claims for the period prior to the end of June.
From 1 July the furlough scheme becomes more flexible before it ends completely on 31 October 2020. The flexible scheme applies to employers currently using the scheme for previously furloughed employees. Employees will continue to receive 80% of their salary, subject to the cap, but employers will need to share the burden of paying NI and salaries from August onwards. As under the original scheme, employers can top up the wages above the grant for fully furloughed staff if it is feasible for them to do so. Employees can work part-time under the revised flexible scheme. Government guidance says that the capped figures apply in proportion to the hours not worked.
Timeline for the flexible scheme
There are now the following five stages:
From 10 June the furlough scheme is effectively closed for employees who have not been previously furloughed. Until June 30 employers can claim for 80% of furloughed employees current salary, up to £2,500 but the employee must not work for the employer. Employer National Insurance Contributions and certain pension contributions can be claimed too. Employers are not required to contribute anything towards furloughed employees’ salaries for June.
The new flexible scheme applies only for previously furloughed employees. These people can now return to work part time, but employers can still claim the grant for normal hours not worked. Any amount of working time and any shift pattern can be agreed with the previously furloughed staff. Until July 31 employers can still claim for 80% of the furloughed employees current salary, up to £2,500 as well as employer National Insurance Contributions and pension contributions. This only applies for the hours the employee doesn’t work. Employers must pay employees for the hours they work.
The main change is that from 1 August, employers will have to pay employee’s National Insurance Contributions and pension contributions, and can no longer claim a grant for these. Until August 31 the government will pay 80% of furloughed employees wages up to a cap of £2,500 for hours not worked. Employers must pay employees for the hours they work. Employers funding of employers’ NICs and pension contributions applies to both the hours not worked and hours worked if any.
From 1 to 30 September the government will pay 70% of furloughed employees wages up to a cap of £2,187.50 for hours not worked. Employers will pay 10% of wages to make up 80% total up to a cap of £2,500 plus employers’ total NICs and pension contributions.
From 1 October until the end of the scheme on 31 October the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work. Employers will pay 20% of wages to make up the 80% total up to a cap of £2,500 plus employers’ total NICs and pension contributions.