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CORONAVIRUS JOB RETENTION SCHEME UPDATE

The Chancellor announced last week three changes to the scheme:

  1. From 1 July 2020, the scheme will be made more flexible to enable employers to bring previously furloughed employees back part time and still receive a grant for the time they are not working
  2. From 1 August 2020, employers will have to start to contribute to the wage costs of paying their furloughed staff and this employer contribution will gradually increase in September and October
  3. The scheme will close to new entrants from 30 June

 

  1. Part time furloughing

From 1 July 2020, businesses using the scheme will have the flexibility to bring previously furloughed employees back to work part time-with the government continuing to pay 80% of the wages for any of their normal hours they do not work until the end of August. This comes a month earlier than previously announced.

 

Employers will decide the hours and shift patterns their employees will work on their return, and will be responsible for the paying their wages in full while working. This means that employees can work as much as or as little as the business needs, with no minimum time that they can furlough staff for.

Any working hours arrangement agreed between a business and their employee must cover at least one week and be confirmed to the employee in writing. When claiming the CJRS grant for furloughed hours, they need to report and claim for a minimum period of a week. They can choose to make claims for longer periods such as monthly or two weekly cycles if preferred. 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.

 

  1. Employer contributions

From August, the government grant provided through the job retention scheme will be slowly tapered.

  • In June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance and pension contributions for the hours the employee does not work
  • In August the government will continue to pay 80% of the wages up to a cap of £2,500 but employers will pay employers National Insurance and pension contributions-for the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed
  • In September, the government will pay 70% of the wages up to a cap of £2,187.50 for the hours the employee does not work-employers will pay employers National Insurance, pension contributions and 10% of wages to make up to a cap of £2,500.
  • In October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work-employers will pay employers National Insurance, pension contributions and 20% of the wages to make up the 80% of the total up to the cap of £2,500
  • The cap on the furlough grant will be proportional to the hours not worked

 

Many smaller employers have their National Insurance contributions covered by the Employment Allowance so this should not have a significant impact.

 

  1. Important dates

Its important to note that the scheme will be closed to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that have been furloughed for a full three-week period prior to 30 June.

This means that the final date by which an employer can furlough an employee for the first time will be the 10 June for the current three-week furlough period to be completed by 30 June.

Employers will have until 31 July to make any claims in respect of the period to 30 June.

 

Further guidance on how to calculate claims will be available on 12 June.

Please contact the Spirare Team for further details or support.