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01st June 2020

Coronavirus Job Retention Scheme: Extension Update

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Following the Chancellor’s, Rishi Sunak’s, announcement on 12th May of the proposed extension to the Coronavirus Job Retention Scheme (the Scheme) until October with the promise of permitting employees back to work on a part-time basis, businesses and employment lawyers alike have been eagerly awaiting further details. Such details were announced by the Chancellor on 29th May and HM Treasury has produced a helpful factsheet with some of the finer details. The timeline and proposed reduction in the government grants under the extended Scheme are as follows:

  • June and July 2020
  • The government will continue to pay 80% capped at £2,500 (as well as employer NICs and pension contributions). Employers will not be required to make any contribution at this stage.

  • 30th June 2020
  • The Scheme will be closed to new entrants from this date. As the minimum 3-week furlough period under the Scheme needs to have been completed by this date, the deadline by which an employer can furlough an employee under the Scheme for the first time is 10th June 2020.

  • 1st July 2020
  • Applying a month earlier than expected, furloughed employees will be able to return to work on a part time basis (known as “flexible furloughing”). Whilst the government will continue to pay up to 80% capped at £2,500, employers will be required to pay employees for the time that they work including the tax and national insurance contributions (NICs) on such amounts. Employers are free to agree any working arrangements with their furloughed employees but, to be eligible for the grant, any such agreed terms should be confirmed in writing (which is always advisable from an employment law perspective in any event). What is critical, however, is that employers will only be able to make a claim from 1st July if they have previously claimed under the Scheme.

  • August 2020
  • The tapering of the government grant will begin and employers will be required to contribute to the costs. For the time that they are not working, the government will pay 80% of employees’ wages capped at £2,500 whilst employers will begin to share the burden by taking on the employer NICs and pension contributions.

  • September 2020
  • The government will cover up to 70% of a furloughed employee’s wages capped at £2,187.50, with employers covering the remaining 10% (in addition to employer NICs and pension contributions) resulting in a total of 80% of wages capped at £2,500.

  • October 2020
  • The government’s grant reduces again to 60% of the furloughed employee’s wages capped at £1,875. The employer is responsible for the remaining 20% (in addition to employer NICs and pension contributions) resulting in a total of 80% of wages capped at £2,500.
Claims under the new flexible furloughing scheme can be made from 1st July 2020. In terms of what further information will be required to be provided to HMRC, employers will need to provide data on the hours of work an employee would be expected to undertake during a claim period as well as the actual hours that they have worked. Claims under the Scheme for furloughed hours will need to be reported and claimed for a minimum period of a week.

As with the current Scheme, it will remain up to employers if they wish to “top up” furloughed employee’s wages at their own expense.

Further guidance is expected on 12th June regarding flexible furloughing and, in particular, how claims should be calculated by employers.

Permitting employees to return to work part-time from 1st July with employers taking on some of the financial burden has generally been seen as reasonable and fair. However, there are concerns for those sectors (such as hospitality and leisure) who are still unable to open for business. Without some form of continued support, such sectors may be forced to consider redundancies or, in the worst cases, close.

You can read the full announcement here.
There is also a helpful factsheet for the Scheme which you can access here.

For more information on any of the items raised in this article please contact Lynne Adams on 01908 247025 or click here to email Lynne.