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The Future of Furlough

Furlough

As we know, the CJRS scheme and furlough cannot continue indefinitely. It was confirmed on Friday 29 May 2020 that the scheme will remain open until 31 October 2020 to support employees and businesses back to work.

It feels like employers have just got their heads around the current furlough rules due to the never-ending changes (often announced on a Friday evening!). We must now prepare for the Flexible Furlough Scheme.

More guidance on this is set to be published by the government on 12 June 2020 but here’s what we know so far!

June July August September October
Government Contribution: employer NICs and pension contributions    Yes    Yes    No    No    No
 

Government Contribution: wages

  80% up to        £2,500 80% up to £2,500 80% up to £2,500 70% up to £2,187.50    60% up to       £1,875
 

Employer contribution: employer NICs and pension contributions

   No    No    Yes    Yes    Yes
 

Employer contribution: wages

  10% up to        £312.50   20% up to        £625
 

Employee receives under the furlough scheme

  80% up to        £2,500 per      month   80% up to        £2,500 per      month   80% up to        £2,500 per      month   80% up to        £2,500 per      month   80% up to        £2,500 per      month
 

Flexible Furlough available?

   No    Yes    Yes    Yes    Yes


June

In June the scheme will continue as it has done since March 2020 when it began. As our previous blog on furlough has outlined, this means that employers do not need to make any contribution (but if they want to top up to 100% they can at their discretion) and the government will pay up to 80% of employee’s salary up to a cap of £2500.

An important date this month is 10 June 2020 which is the deadline for any new furloughed staff; if you want to take advantage of the new flexible furlough which starts on 1 July, they need to already be furloughed on this date.

July

In July, employers are not expected to contribute to an employee’s salary, unless they decide to undertake the part time furlough and part time working option which is available from 1 July 2020.

This is called ‘flexible furlough’ which means that from 1 July, employers can come to their own arrangements with their staff about coming back to work part time if there is now some workload due to the lift in lockdown restrictions.

We strongly recommend you consult with all affected staff and agree any changes to working hours in respect of flexible furlough, or not, in writing with each employee and retain these for 6 years.

Flexible furlough would mean that the employer pays an employee for the part time hours worked and the furlough scheme will contribute up to 80% for the unworked hours, based on normal hours worked in that claim period. This can be in any method an employer wants (eg. 60:40, 50:50, etc). An employer will need to report and claim for a minimum period of at least a week, but it can be for longer periods such as monthly or two weekly cycles if that’s better for employers.

If there is no intention for employees to return on a flexible basis in July, then then furlough schemes continues to exist as it currently stands.

August

In August, the 80% government contribution will remain; the change here is that employers will be required to pay employer national insurance and employer’s pension contributions which, for the average claim, accounts for only 5% of total employment costs.

Flexible furlough will also continue throughout August.

September

In September, the government contribution will reduce for the first time and they will only contribute 70%, with the employers contributing the remaining 10% in addition to NI and pensions contributions.

Flexible furlough will also continue throughout September.

October

In October, the government contribution will be reduced to 60% (up to £1,875), whilst employers will contribute 20% in addition to NI and pensions contributions.

Flexible furlough will also continue throughout October, but it is due to end on 31 October 2020.

Self-Employment

Good news for the self-employed – the Self Employment Income Scheme will be extended for a further three months which takes them to the end of august.

The closing date for current claim, for the last 3 months, is 13 July. We have created a video on the original application process below.

 

 

The eligibility criteria are the same for both grants, but the value of the final grant will only be 70% of average monthly trading profits, capped at £6,570 (covering June July and August) which is in line with the reduced contribution for the flexible furlough scheme.

You can make a second claim in August; keep an eye out for out updates next week once we have seen the new guidance, which is due to be released 12 June.

You do not have to have made a claim the first time to be eligible to claim the second time.

Our Coronavirus helpline at coronavirus@thrivelaw.co.uk remains open, and we are already seeing more enquiries as employees are expected to return to work. If we can be of any assistance, we are always available.

 

Written by Annabelle, Alicia and Jodie

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