The end of Furlough?
The Coronavirus Job Retention Scheme – The End of Furlough?
On the 29th of May, the chancellor announced some major new updates to the Coronavirus Job Retention Scheme to help get businesses back on their feet and employees back to work. Here we outline the latest changes and highlight what you need to know.
Deadline for new entrants
Probably the most pressing matter right now to come from the announcement is the closure of the scheme for new applicants on 30th June. Officially, employees that have not been furloughed for at least three weeks before this date are not able to be furloughed going forward. This means that as an employer, if you are planning to access the scheme after the 30th of June, you need to have furloughed the relevant employees by 9th June at the latest. If your employee is not on the scheme by this date, then they cannot be claimed for through the scheme.
The next change that will come into play is the introduction of part-time furloughing from 1st July. Any employees that have previously been fully furloughed can be brought back to work on a reduced hours basis. As the employer, you will need to have a written shift-pattern agreement with the employee. You will need to pay the employee full wage for the hours they work and can claim 80% of their wage from the government for the hours they don’t work, with reference to their usual hours worked. We are expecting a further update on how this will be calculated on 12th June.
The other way that the scheme is planning to ease employees back into the workplace is the gradual withdrawal of government financial help over the coming months. As mentioned, July sees the introduction of part-time furloughing, and from 1st August is the handing over of the responsibility of paying employer pension and national insurance contributions back to the employer, which was previously claimable under the scheme. From 1st September, the government will reduce the contribution to employees’ wages from 80% to 70% and from 1st October reducing to 60%. The employee must continue to be paid at least 80% of their wages whilst on furlough, so the employer must cover the difference. As it stands, the scheme is due to close at the end of October, when all responsibility for paying wages is passed back to the business.
If you are planning on using the scheme between now and then, then you need to make sure you are aware of and comply with the government guidance outlined here. As mentioned, we are expecting another update on the 12th of June, so we will get a better idea of what is to come after then.
If you are a small business owner who has been adversely affected by Covid-19 and are unsure regarding the funding options available to you – please do not hesitate to get in contact and we would be more than happy to run you through your options.