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Coronavirus Job Retention Scheme – Flexible Furlough and the Tapering of Support

The eagerly awaited news on the final stages of the furlough scheme have now been announced by the Chancellor. The bare bones of the changes have been published via guidance on the .Gov pages, with the finer details to follow by 12 June, and it is anticipated further that amendments will be made to the Treasury Directions last updated on 20 May 2020.

As expected, provision has been made for part time furlough arrangements (albeit a little sooner than anticipated), and a modest financial contribution is to be made by the employer from 1 August as the scheme seeks to provide the flexibility desperately needed, and encourage ‘business as usual,’ but in the ‘new normal’ way. For many, it will be business as never seen before as employers consider, consult and implement the raft of social distancing measures required to make our workplaces and leisure facilities COVID-19 secure. Our specialists at Square One Law can provide essential bespoke advice interpreting the guidance and practical solutions to plan a safe and viable return to work.

Key changes and dates:

Flexible furlough from 1 July

  • Employers can bring furloughed employees back to work on a flexible, part time basis for any amount of time or shift pattern.
  • Any working arrangement can be agreed with these employees, however this agreement must be in writing.
  • The employer will then pay for the hours actually worked, whilst claiming from the scheme the remaining hours that the employee would have usually worked during that period.
  • The minimum claim period will be one week (not the three week period, as is the current requirement).
  • When making a claim employers will need to report hours worked against the employee’s usual hours.

No new entrants to the Scheme from July 2020

  • From 30 June, employers will only be able to furlough employees that have already been furloughed for a full three week period prior to 30 June.
  • Practically speaking, employees previously not on furlough must therefore be placed on furlough by 10 June in order to ensure that they have been furloughed for the three full weeks by 30 June.

Employer contribution will be imposed from August 2020

  • The current arrangements of the government paying 80% of wages up to a cap of £2,500 as well as employer NICS and pension contributions for the hours the employee does not work remains in place during June and July. During the month of July the employer will only pay for any hours that are worked.
  • 1 August – The government will continue to pay 80% of wages (up to a cap of £2,500) for any hours not worked, but employers will pay all employer NICS and pension contributions payable on that sum.
  • 1 September – The government will pay 70% of wages up to a cap of £2,187.50 for hours not worked. Employers will pay employer NICS and pension contributions and 10% of wages to make up 80% total, up to a cap of £2,500 for the hours the employee does not work.
  • 1 October – The government will pay 60% of wages up to a cap of £1,875 for unworked hours. Employers will pay employer NICS and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500 for the hours the employee does not work.  The cap will be proportional to the hours not worked.

Employers can still choose to top up employee wages above the grant scheme, this is optional and at the employer’s expense. The finer details are expected in the next couple of weeks, until then, employers will need to base their strategic planning on the guidance published to date. Hopefully, this ability to plan for the immediate future, combined with the return to school for some, and other non-essential retail outlets opening their doors in mid-June, will provide some confidence to many businesses which until now have been on pause. The flexibility these changes provide should allow business to gauge demand and the functionality of the measures in place to protect their workforce and customers. As always, with any new arrangement during this crisis employees should be involved in the process through consultation, and whilst the ‘lockdown’ is being tentatively eased, employers should remain vigilant and alive to the worries and concerns of employees as the economy opens up for business.

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