Furlough pay: Employers are required to contribute in the future
As indicated by the government on 12 May, they have now provided details of the extension of the Coronavirus Job Retention Scheme from 1 July 2020. The scheme is evolving in line with the governments phased approach to re-opening the economy and as some employees are being allowed to return to work, it makes sense that the employers should be prepared to take some of the burden off the Treasury.
From 1 July, employees who have been furloughed can be brought back to work on a part-time basis under the flexible furlough arrangements. The employer will pay the full wages for the hours worked and the scheme will cover the remaining unworked hours to the maximum level.
The key points of the extended scheme are:
- The scheme will continue until end of October.
- From 1 July 2020, employers will be given the flexibility to bring furloughed employees back part time. Firms will determine the hours and shift patterns their employees will work on their return so they can decide what arrangements will meet the needs of the business.
- Employers will need to report and claim for a minimum period of a week when claiming the grant for furloughed hours.
- Employers can claim the grant for the hours their employees are not working calculated by reference to their usual hours worked in a claim period.
- The employer must pay the employee for the worked hours, including PAYE and NICs, based on their employment contract.
- The employer must agree with their employee any new flexible furloughing arrangements and confirm this in writing.
- Claims from July onwards will be restricted to employers currently using the scheme and previously furloughed employees. The scheme will close to new entrants on 30 June so the final date by which an employer can furlough an employee for the first time will be 10 June.
- From August 2020 the government grant through the CJRS will be tapered to reflect that people will be returning to work so for June and July the grant will continue at the 80% rate.
- For June and July, the government will pay 80% of wages up to a cap of £2,500 as well as the employer National Insurance (ER NICS) and pension contributions. There will be no contribution required by the employer
- For August, the government will pay 80% of wages up to the cap of £2,500. The employer will pay the ER NICS and pension contributions.
- For September, the government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up the 80% total up to a cap of £2,500.
- For October, the government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up the 80% total up to a cap of £2,500.
- The new caps will be proportional to the hours not worked.
For information on the extension to the self employed scheme (SEISS) please click here.
Further guidance on flexible furloughing and how employers should calculate claims will be published 12 June 2020. We will be providing further updates following those announcements.
Meanwhile if you have any questions please contact us