As you may have heard, Chancellor Rishi Sunak has announced reforms to the Coronavirus Job Retention Scheme on Friday 29 May 2020. We are awaiting updates to the Treasury Direction and the Employer’s Guidance but these are the headline points announced at his press conference:
- 10 June 2020 will be the last day that employers can place employees on furlough.
- from 1 July, ‘flexible furlough’ is being introduced, meaning employees will be able to work part-time and be furloughed part-time. Businesses will decide how that will work (in terms of the time split). Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June.
- from 1 August, employers will have to pay employee’s national insurance contributions (13.8%) and pension contributions, and can no longer reclaim them through the CJRS.
- from 1 September, the government will only reimburse 70% of salary (up to a maximum of £2,190). Employers are required to top-up to 80% (or more, depending on what the employer agreed with the employee).
- from 1 October, the government will only reimburse 60% of salary (up to a maximum of £1,875), and employers will continue having to top up to 80% (or more).
- the furlough scheme will close on 31 October 2020.
If you are a smaller employer, some or all of your employer NIC bills will be covered by the Employment Allowance, so you should not be significantly impacted by that part of the tapering of the government contribution.
Around a quarter of CJRS monthly claims relate to wages that are below the threshold where employer NICs and auto enrolment contributions are due, and so no employer contribution will be required for these furloughed employees in August.
It’s important to note that the scheme will close to new entrants from 30 June. From this point onwards, you will only be able to furlough employees that you have furloughed for a full three-week period prior to 30 June.
This means that the final date that you can furlough an employee for the first time will be 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.
Once the further guidance has been published on 12 June, we will provide further guidance.
If you have any queries regarding any aspect of employment law please do not hesitate to get in touch by speaking to one of the team on 01926 355560 or contact us here