Coronavirus Job Retention Scheme – Update June 2020
Article updated Friday, 3rd July 2020
The Coronavirus Job Retention Scheme (“the Scheme”) has been updated. Throughout June and July, the Scheme will remain unchanged. From 1 August, the government will continue to pay 80% of wages up to a cap of £2,500, but employers will be required to pay the employer national insurance contributions and pension contributions. From 1 September, the government contribution will drop to 70% of wages (up to a cap of £2,187.50) and employers will be required to pay 10% of wages to make the total up to 80% (plus employer national insurance contributions and pension contributions). Finally, in October, the government contribution will be reduced to 60%. Employers will be required to pay 20% of wages to make the total up to 80% (plus employer national insurance contributions and pension contributions). The government contribution in all scenarios will be proportional to the hours not worked.
It is important to note that claims under the Scheme from July onwards will be restricted to employers currently using the scheme and to previously furloughed employees. The scheme closed to new entrants on 30 June, which meant that the last date you were able to furlough an employee for the first time was 10 June. However, the Government has agreed that parents on maternity leave (and other similar types of leave) are exempt to this cut-off date and are still be eligible after this date, provided the employer has already used the furlough scheme for other eligible employees by that date.
From 1 July, employers will be able to agree part time working arrangements with previously furloughed employees under, what is termed, “flexible furloughing”. Furloughed employees can be brought back to work any amount of time and any shift pattern and the employer can claim under the Scheme for their normal hours not worked (referred to as furloughed hours), subject to the relevant caps which will still remain in place. When claiming for furloughed hours; employers will need to report and claim for a minimum period of a week (but can still make claims for longer periods e.g. monthly or two weekly cycles). By way of example, employees who normally work 5-days per week can be brought back to work 2-days per week (at full pay) but remain on furlough for the remaining 3-days at the reduced rate.
As before, the employer will still need to agree with the employee any period of flexible furloughing and confirm their agreement in writing. When making a claim to HMRC, employers will need to report the number of hours the employee would ordinarily work and the number of hours worked.
Employers will not be required to contribute to employees 80% (capped at £2,500) furlough pay until 1 August 2020.