We have known for some time now that the Coronavirus Job Retention Scheme would be coming to an end in October 2020, but we have been waiting for further detail in relation to this and the changes to the scheme that were expected from August onwards. The Chancellor has now set out his road map for how the scheme will come to an end and the increased financial obligations for employers in relation to the payments being made to employees on furlough. Further updates to the Treasury Direction are expected to provide clarification but the latest changes are set out below:
WHAT HAS CHANGED AND WHAT HAS BEEN CLARIFIED?
The important features are:
- 10th June 2020 - deadline to place employees on furlough.
- 1st July 2020 – scheme closes to new entrants who have recently been furloughed.
- 1st July 2020 onwards – employers can bring employees back to work on a part time basis who have previously been furloughed, for any amount of time and on any shift pattern. This means that employers will still be able to claim under the scheme for ‘working hours’ spent on furlough but will have to pay in full as normal for any hours actually worked.
- 1st August 2020 onwards - employers will have to pay employee’s national insurance contributions and pension contributions and can no longer reclaim them through the scheme.
- 1st September 2020 onwards – the scheme will only reimburse 70% of salary (up to a maximum of £2,190). Employers are required to top-up to 80% (or more, depending on what was agreed with the employee) and will continue to also pay the employee’s national insurance and pension contributions on their salary.
- 1st October 2020 onwards - the scheme will only reimburse 60% of salary (up to a maximum of £1,875), and employers will continue having to top up to 80% (or more, depending on what was agreed with the employee). Employers will continue to also pay the employee’s national insurance and pension contributions on their salary.
- 31st October 2020 – Coronavirus Job Retention Scheme closes.
WHAT ABOUT THE SELF-EMPLOYED?
The government’s Self-Employment Income Support Scheme (SEISS) has also been extended to cover income for June, July and August 2020.
A second and final grant can now be claimed by those who are self-employed with applications opening in August 2020. This second grant will again be paid in one lump sum based on average trading profits. Changes to the second grant are similar to those introduced under the furlough scheme which means that the grant will be calculated based on 70%, not 80% of average earnings up to a maximum of £6,570 (previously £7,500).
WHAT DO EMPLOYERS NEED TO DO NOW?
If employers plan to bring employees back to work from 1st July on a part time basis and still claim a grant under the scheme for the balance of time that they remain on furlough, they will need to agree this flexible arrangement with their employees and then record that agreement in writing. Further guidance on how these flexible arrangements will work and how employers should calculate claims are expected to be published on 12th June 2020.
If you have any questions about bringing your furloughed employees back to work and what your obligations are under the scheme, please contact Julie Edmonds, Head of Employment, by email firstname.lastname@example.org telephone 0207 644 7286 or contact her on LinkedIn.