The Chancellor has today set out details of changes to the Coronavirus Job Retention Scheme, also known as the Furlough Scheme, designed to encourage employers to bring their staff back into the workplace and manage the transition period out of lockdown.
The key points are as follows:
The Government contribution of 80% of salary will continue until 31 August 2020. This is longer than anticipated. During August, employers will be expected to fund the employers’ NI and minimum pension contributions, which amount to approximately 5% of the wage bill.
After this time, employers will be required to contribute to the 80% grants. This will require a 10% contribution to furlough pay in September, and a 20% contribution in October (and the circa 5% minimum pension and employer NI costs). The scheme is still expected to cease on 31 October as previously announced.
The Government will also introduce flexible furloughing from June 30 onwards. This is a month earlier than anticipated. This will mean that employers can bring back staff for, say, 2 days per week at full pay, and the government will fund the remaining 3 days per week at the furlough rate of 80% during July and August. It appears that from September, employers would then be required to fund 10% of the part time furlough pay, moving to a 20% contribution in October.
The old scheme will close on 30 June, to be replaced by a ‘flexible furlough’ scheme. Employers will not be able to add new employees to the furlough scheme after 10 June 2020, this is so that the minimum requirement of 21 days for a period of furlough can be met.
There is now greater clarity for employers on the levels of financial support to be provided, and an opportunity to review their staffing needs in light of the time frames just announced, and the likely trajectory of demand for their goods and services. With the costs of the return to work now apparent, we would encourage all employers to take advice on how best to reintroduce staff to the workplace, and ensure that the return to work is compliant with existing employment law and the necessary health and safety requirements of the socially distanced workplace.