Update – Covid-19 – Furlough Leave 4 June 2020
On Friday 20 March, the Government announced the introduction of the Coronavirus Job Retention Scheme (“the Scheme”) in an effort to help employers avoid the need to make mass redundancies as a result of the impact of COVID-19. Details of the scheme have been set out in HMRC guidance and Treasury Directions (which are frequently updated) (see links below).
Under the Scheme the Government pays 80% of employee wages up to a cap of £2,500 as well as employer National Insurance Contributions (ER NICS) and pension contributions (both capped). The employee is not allowed to do any work for the employer.
On Friday 29 May, the Chancellor of the Exchequer made an important announcement setting out further detail on how the Coronavirus Job Retention Scheme will operate between July and the end of October. Further detail should be available on 12 June 2020, but the main points to be aware of now are:
- The Scheme will run until October 2020 with employers having to pay an increased contribution towards the costs of the Scheme from August 2020;
- The Scheme will close to new entrants from 30 June 2020, and therefore the last date on which staff can be furloughed for the first time, will be 10 June 2020, in order for the minimum 3 week period of furlough to be completed;
From 1 July 2020:
- Employers will be able to bring employees back to work whilst still being able to claim for normal hours not worked under the Scheme – “flexible furloughing;”
- Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period;
- For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts;
- Employers will be able to claim for a minimum period of 1 week of furlough (rather than the current 3 weeks);
- Employers must agree with their employee any new flexible furloughing arrangement and confirm that agreement in writing;
- Claim periods will no longer be able to overlap months, employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this going forward;
From August 2020:
- The Government will pay 80% of wages up to a cap of £2,500;
- Employers will have to pay ER NICs and pension contributions for the hours the employee does not work;
From September 2020:
- 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 and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500;
From October 2020:
- 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 and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.
Further information on the Scheme can be accessed here:
Government factsheet on changes to CJRS: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/888764/Factsheet_for_SEISS_and_CJRS_schemes.pdf
Guide for Employers:
Should you require any further information or advice on dealing with specific issues (such as the above) or employment matters generally, please contact any member of the Employment Law Unit:-
Tel: 028 9024 5034
Copyright 2020 Elliott Duffy Garrett
Every care has been taken in the preparation of this bulletin; readers are advised however to seek legal advice in relation to specific issues.