Coronavirus Job Retention Scheme – Updated Guidance for Employers (2nd June 2020)

posted by KeithDaniel

As you will no doubt be aware, the Government are continually releasing new guidance and information with regards to the Coronavirus Job Retention Scheme (the “Scheme”) as the pandemic continues here in the UK. On 29th May 2020, the Chancellor of the Exchequer set out a number of changes to the Scheme which will come into effect over the coming months.

The Scheme will continue to operate in its current form until the 30th June 2020. After this date, the following changes will be implemented:

  • The Chancellor has now confirmed that, from 1st August, employers will be required to pay the relevant employer National Insurance contributions (NICs) and employer pension contributions. The Government will continue to pay 80% of an employee’s normal pay, subject to the cap of £2,500 per month.
  • From 1st September 2020 to 30th September 2020, the Government will pay 70% of a furloughed employee’s normal pay, up to a cap of £2,187.50 per month. Employers will be required to top up the employee’s pay by 10% so that the furloughed employee receives 80% of their normal pay in total. The employer will also be liable to pay the employer NIC’s and employer pension contributions, calculated with reference to the reduced salary.
  • From 1st October 2020 to 31st October 2020, the Government will pay 60% of a furloughed employee’s normal pay, subject to a cap of £1,875 per month. Employers will be required to top up the employee’s pay by 20% so that the furloughed employee receives 80% of their normal pay in total. Again, the employer will also be liable to pay the employer NICs and employer pension contributions, calculated with reference to the reduced salary.
  • The Scheme will close to new members from 1st July 2020. This means that employers will not be able to furlough any employees who have not previously been furloughed for the minimum period of three weeks from this date. Therefore, the 10th June 2020 will be the last date that employers can furlough employees who have not previously been furloughed.
  • From 1st July 2020 to 31st October 2020, employers will be able to bring back furloughed employees on a flexible, part-time basis, provided the employee consents to the new working pattern in writing. The employee must receive their full pay for all hours worked, but can receive furlough pay for those hours not worked (i.e. periods of furlough leave). The employer will however be liable to pay the relevant employer NICs and employer pension contributions.

It is important to note that the only employees who will be eligible for this part-time scheme, will be those who were furloughed on or before 10th June 2020. In addition, the number of employees that an employer will be eligible to claim for in any claim period cannot exceed the maximum number of employees it claimed for under any previous claims. Those employers who have rotated employees on furlough leave will need to pay particular attention to this.

The press release can be found here and a fact sheet with further details can be found here.

It is expected that we will receive further information regarding the final stages of the Scheme on 12th June 2020. We will therefore endeavour to provide you with a further update as soon as this information becomes available.  

Unless the Scheme is extended further, it is expected to end on 31st October 2020. Therefore, it is important that employers start planning for their post-furlough future and establish whether their pre-crisis structure and employment costs will be sustainable when the Scheme comes to an end. It is also vital that employers consider whether employment costs will be sustainable over the coming months as the Government’s subsidy is reduced. If there is a need to reduce staffing costs, a range of responses will need to be considered to ensure that the Company has a strategy in place. 

Please contact us if you would like more information about the issues raised in this article or any other aspect of employment law at 029 2034 5511 or employment@berrysmith.com