Coronavirus Job Retention Scheme update: Arrangements for phasing out

On Friday 29 May 2020 the government announced more details about the extension to the Coronavirus Job Retention Scheme. Our employment lawyers summarise the latest below:

Last date for furloughing

The Coronavirus Job Retention Scheme is closing to new entrants from 30‌‌ June 2020. From that date onwards, only those employees that have already been furloughed for a full three-week period can continue to be furloughed.

This means that the final date an employee can be furloughed for the first time will be 10‌‌ June 2020. Claims in respect of the period to 30 June 2020 can be made up until 31‌‌ July 2020.

Part-time furlough

From 1‌‌ July 2020, employers will be able to bring previously furloughed employees back to work on a part-time basis. Until 31 August 2020, the government will continue to pay 80% of wages for any normal hours the employee does not work.

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

Any working hours arrangement agreed with the employee must apply for at least one week, and must be confirmed to the employee in writing. This will probably require a written amendment or replacement of the current furlough agreement.

When claiming the Coronavirus Job Retention Scheme grant for furloughed hours, employers will need to report and claim for a minimum period of a week. Claims can be made for longer periods such as on monthly or two weekly cycles, if preferred. The employer will need to supply information about the hours an employee would be normally work in a claim period, and the actual hours worked.

If employees are unable to return to work, or the employer does not have work for them to do, they can remain on furlough, and the employer can claim the grant for their full hours under the existing rules.

Employer contributions

From 1 August 2020, the government grant provided through the Coronavirus Job Retention Scheme will be gradually diminished.

• In June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee does not work.  Employers will have to pay employees for any hours they work in July (furloughed employees may not work at all in June).
• In August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs 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. Smaller employers will have some or all of their employer NIC costs covered by the Employment Allowance, so the government says they should not be significantly impacted by that part of the tapering of the government contribution.
• In September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total 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 ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500.
• The cap on the furlough grant will be proportional to the hours not worked, i.e. if an employee is brought back to work for 50% of their normal hours in July and furloughed for the other 50%, the cap will be £1,250 in July.

Throughout the Coronavirus Job Retention Scheme, employers will have to pay employees 80% of their wages for any furloughed hours, even if the government grant has reduced below 80%. Employers will have to make up the difference themselves.

Coronavirus Job Retention Scheme end date

It is currently planned that the Coronavirus Job Retention Scheme will end altogether by 31 October 2020.

We’re here to help

We appreciate that it is a confusing and uncertain times for employers, but we’re here to help now and beyond the pandemic.

Our employment law team is fully equipped to advise you on your rights and obligations in this most unusual situation and how best to implement this guidance across your workforce.

Our legal services are operating as normal, with all of our lawyers able to work safely from home.

Please call 01242 514000 or email Matthew Clayton in our employment law team and we will be delighted to help.

We’re regularly updating our website with more COVID-19 legal insights, so keep an eye on this page for the latest legal perspectives relating to the coronavirus.