Important changes to furlough and self-employed support scheme
- AuthorJulie Temple
On 29 May 2020, as part of the government daily briefing, the Chancellor announced the awaited details of how the Coronavirus Job Retention Scheme (CJRS) (or furlough scheme) will change come 1 August 2020.
The headlines are that:
- For June and July 2020 there will be no change: employers can claim 80% of wages (capped at £2,500 plus employer NIC and pension contributions) and are not required to contribute (but see below for flexible furlough from 1 July 2020)
- 10 June 2020 (Wednesday): Last date an employee can be furloughed to qualify for furlough from 1 July 2020 onwards (with claims open to be made up to 31 July 2020)
- 30 June 2020: CJRS closes to new entrants. Employers who have previously used the scheme can continue to do so in respect of employees who have completed a three week period of furlough. We think but are seeking clarification, this means the employee does not need to be on furlough between 10 June and 30 June.
- from 1 July 2020:
- 'flexible furlough' will be introduced allowing employees to work part-time and be on furlough part-time with employers able to decide the proportion of work and furlough.
- employers will be responsible for paying the wages in full for hours worked
- the cap on the furlough grant will be proportional to the hours not worked
- claims will be restricted to employers currently using the scheme and previously furloughed employees
- there will be no minimum time on furlough
- working hours agreed 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 and the employer can continue to claim the grant for their full hours under the existing rules
- from 1 August 2020 employers must pay employer's NICs and pension contributions rather than a claim under CJRS, with the claim remaining at 80% of salary (capped at £2,500 or proportional to hours worked)
- from 1 September 2020 employers can claim 70% of salary (up to a maximum of £2,190 or proportional to hours worked) and will be required, in addition to paying employer's NICs and pension contributions, to top-up at least the remaining 10% to 80% (capped at £2,500 or proportional to hours worked) but may need to top up more depending on what has been agreed with the employee
- from 1 October 2020 (and for the last month of CJRS) employers can claim 60% of salary (up to a maximum of £1,875 or proportional to hours worked) and will be required, employer's NICs and pension contributions, to top up at least the remaining 20% to 80% (capped at £2,500 or proportional to hours worked or more).
- CJRS will close on 31 October 2020.
Government guidance will be available by 12 June 2020!
There is much to consider over the next 10 days as under these revisions employers:
- furlough of staff previously not on furlough by 10 June 2020 to allow for the option of flexible furlough from 1 July 2020
- may wish to make some tough and quick decisions to restructure and/or make redundancies to benefit from the ability of furlough to run alongside and contribute to notice pay
- will want to consider and discuss with employees a return to work flexibly from 1 July 2020 (and in advance of any need to contribute other than for hours worked) whilst also considering any requirements to temporarily or permanently amend contracts and make the workplace COVID-secure.
In addition, the self-employed grant is extended and applications can be made in August 2020 for a second and final (but tapered) grant paying 70% of average earnings up to £6,750. Applications for the first grant can be made up to 13 July 2020.
We have a fixed-price Covid-19 resource package available (and quickly developing other dedicated fixed price online resource packages) which include up to date guidance and templates and which are accessible 24/7.
If you are an HR consultant advising your own clients, we can offer you a second opinion – during these uncertain and quickly changing times.
Get in touch with the Birkett Long employment and BLHR team who can discuss these with you. If you just want to talk, we can help, support and guide you through the decisions. We offer a free 15-minute discussion so don’t hesitate to get in touch.
There are enough things to worry about at the moment; don’t let that niggle be one of them – get in touch. I can be contacted on 01206 217318 or email@example.com.