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How furlough is changing from 1 July 2020

View profile for Julie Temple
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How furlough is changing from 1 July 2020

We've known some of the details since the changes were announced in May and guidance released earlier this month. Further guidance was released on 12 June 2020.

What follows is a summary of how furlough will operate from 1 July 2020 and collated from across the various guidance documents:

https://www.gov.uk/government/collections/coronavirus-job-retention-scheme

https://www.gov.uk/government/publications/changes-to-the-coronavirus-job-retention-scheme/changes-to-the-coronavirus-job-retention-scheme

Employers can use the scheme for employees furloughed for at least 3 consecutive weeks between 1 March and 30 June 2020 ('qualifying furlough').

Employers can claim

  • to 31 July 2020 for 80% of salary (capped at £2,500 or proportional to hours worked) a month plus the associated employer's National Insurance Contributions (NICs) and pension contributions (up to the level of the minimum automatic enrolment employer pension contribution) on the furlough pay
  • from 1 August 2020 for 80% of salary (capped at £2,500 or proportional to hours worked) but must pay employer's NICs and pension contributions
  • from 1 September 2020 70% of salary (up to a maximum of £2,187.50 or proportional to hours worked) but must pay employer's NICs and pension contributions and a top-up of 10% to make 80% in total being paid to the employee
  • from 1 October 2020 (and for the last month of CJRS) 60% of salary (up to a maximum of £1,875 or proportional to hours worked) but must pay employer's NICs and pension contributions and a top-up of 20% to make 80% in total being paid to the employee
  • employers can choose to pay more and may need to depending on the agreement with the employee
  • salary is based on last pay period prior to 19 March 2020 or, if pay is variable, the higher of the amount earned in the same month 2018-2019 or an average of monthly earnings from 2019-2020
  • subject to usual income tax and other deductions

An employer does not have to furlough employees nor does an employee need to be furloughed between 10 and 30 June 2020 to be able to access the scheme after 1 July 2020 provided a claim has been made for qualifying furlough. But note an employee who has completed qualifying period, works between 10 and 30 June 2020 and returns to furlough before 30 June must complete a further 3 week consecutive period of furlough before they can return to work

From 1 July 2020:

  • 'flexible furlough' allows employees to work part-time and be on furlough part-time
  • employers can decide the proportion and pattern of work
  • employers are responsible for paying the wages in full for hours worked
  • the cap on pay under furlough will be proportional to the hours not worked (an employee will be entitled to 60% of the cap if they are on furlough for 60% of their usual hours)
  • there will be no minimum time on furlough
  • agreements to work must cover at least one week and be confirmed to the employee in writing
  • claims under CJRS will include a report and claim for a minimum period of a week
  • claims can be made for longer periods
  • employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked
  • if employees are unable to return to work, or employers do not have work for them to do, they can remain on furlough full-time (full furlough) and the employer can continue to claim the grant for their full hours
  • the maximum number of employees that can be claimed for in any period cannot be higher than the maximum number that has been claimed for in a previous period; if the highest single claim for periods up to and including 30 June was for 100 people, employers may only place on furlough and claim for this number in later periods and not more (although you can add individuals returning from statutory leave who may return and be furloughed even if they return after 10 June 2020 and have not completed qualifying furlough)

During furlough an employee must be:

  • 'instructed … to cease all work in relation to their employment' including for their employer, connected employer and indirect work
  • on furlough 'by reason of circumstances arising as a result of' COVID-19

If you have any questions about employees you have furloughed, please give me a call on 01206 217318 or email julie.temple@birkettlong.co.uk.

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