The government has provided further details of the changes to the Coronavirus Job Retention Scheme which will come into effect from 1 July. Key to the ‘new’ scheme is the ability to bring staff back on reduced hours and claim the balance.
Effectively, there will be an ‘old scheme’ up to 30 June 2020 and a ‘new scheme’ from 1 July – 31 October 2020. We are awaiting full details but this is what we know so far.
The Chancellor has brought forward by a month the ability to operate a ‘flexible furlough’. This means that, from 1 July, employees can be brought back to do agreed hours/shifts/days and the employer will only have to pay for those hours worked. They will be able to claim for the balance of the employee’s wage (with the government’s contribution reducing over time).
Coronavirus Job Retention Scheme Key deadlines
The furlough scheme will be closed to new entrants from 30 June 2020. Employers will only be able to claim for employees who have been furloughed for a minimum 3-week period prior to that date. This means that the last date you can furlough a previously un-furloughed employee to qualify to claim under the new scheme is 10 June 2020.
Please note that the original qualifying requirement for an employee to be working for you on or before 28 February (or to have been on the HMRC payroll run by 19 March) still stands.
Claims under the old scheme must be made by 31 July 2020. HMRC reports that 40% of employers have not claimed for employer’s NI and 3% pension contributions. The NI aspect may be due to the employer receiving Employment Allowance. However, if you are an employer who is entitled to claim for both elements and have not, you must do so by 31 July 2020.
The scheme closes completely on 31 October 2020.
Changes to what the employer must pay
1 June – 31 July 2020: the Government’s contribution to the wages of furloughed employees under the furlough scheme will continue unchanged. HMRC will pay 80% of wages up to a cap of £2,500 per month with no contributions from the employer. HMRC will reimburse employer NICs and minimum employer pension contributions.
1 – 31 August 2020: HMRC will reimburse the lower of 80% of wages or £2,500 per month but employers will not be able to reclaim employer NICs and minimum pension contributions.
1 – 30 September 2020: HMRC will pay 70% of wages up to £2,187.50 per month. Employers will be required to pay 10% of wages to make up 80% total (capped at £2,500). They will not be able to reclaim employer’s NICs and minimum pension contributions.
1 – 31 October 2020: HMRC will pay 60% of wages up to £1,875 per month. Employers will be required to pay 20% of wages to make up 80% total (capped at £2,500). They will not be able to reclaim employer’s NICs and minimum pension contributions.
31 October 2020: the furlough scheme will close altogether.
As with the previous scheme, the employer can choose to top up the payment if they want to.
‘Flexible furlough’ – allowing an employee to do some work for you
Flexible furlough can only be used for employees who are already furloughed as of 1 July 2020. They must have been furloughed for a minimum of three weeks prior to 30 June.
It will not be possible to move employees who are currently working to part-time furlough status before 1 July. This is because 1) this change only comes into effect on 1 July and 2) the employee must already be on furlough to be ‘brought back’ to work.
HMRC’s guidance states that employers can bring back to work employees from furlough, for any amount of time and any shift pattern, while still being able to claim for those contracted hours/days that they are not required to work. So employers will be allowed to furlough employees for only part of their working week, e.g. working two days a week and on furlough for the other three days.
Employees will be paid for hours worked by their employer at their normal full rate of pay in accordance with their employment contract. Employers will also be responsible for paying any tax and NICs due on those amounts.
When making a claim, employers will need to report the hours worked and the usual hours an employee would be expected to work in a claim period.
The small print
The number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim under the current scheme.
Claim periods will be a minimum of one week. They can be longer than a week but cannot overlap months.
If we have been processing furlough claims on your behalf, a member of our Payroll team will be in touch to review your arrangements before the next Payroll run.
Our HR Services team are also on hand to advise you on the Job Retention Scheme and other employee matters.
We are committed to supporting our business clients with professional HR advice which represents exceptional value for money. Our 3-month HR Support Package provides ongoing HR support over a 3-month period for an upfront, fixed flat rate of £300.
To find out more, contact Diane Johnson on 07720 353450 or email firstname.lastname@example.org.