Furlough scheme update

Further to our previous articles, the Chancellor has announced changes to the Coronavirus Job Retention Scheme which will come into effect from August.

Closure to New Entrants

The scheme will close to new entrants from 30 June 2020.

From this date employers can only furlough employees who have been furloughed for a full 3 weeks prior to 30 June.

This means that the final date for employers to furlough an employee for the first time is 10 June.

From 1 July 2020 the scheme will only be available to employers who have previously used the scheme in respect of employees that had previously been furloughed.

Employer Contributions

For June and July there will be no changes at all regarding employer contributions.

From August, employers will be required to pay auto enrolment pension contributions and Employers National Insurance Contributions for staff on furlough. The Government will continue to pay up to 80% of furloughed employees wages up to a maximum of £2,500 per month.

From September the Government salary contribution will reduce to 70% with employer becoming responsible for the other 10%.

From October the Government contribution will reduce by a further 10% to 60% with the employer contribution increasing to 20%.

The scheme will then close in November.

The employee will therefore continue to receive 80% of their salary, capped at £2,500, until the end of October.

Flexible Furlough

From 1 July 2020 it will be possible for employees to return to work on a part time basis whilst remaining on furlough for the days that they are not working.

For example an employer may not have enough work to bring back a full time employee on a full time basis, but may require them to work 3 days a week. In this scenario the employee could come back to work and receive full pay for the 3 days which they work and would be furloughed for 2 days a week for which they would be entitled to 80% of their salary under the Coronavirus Job Retention Scheme.

Should you require further clarification on the above, or any other matter, please contact your Fairhurst partner.