The Government’s furlough scheme is changing next month – here’s what you need to know
Following on from the Chancellor Rishi Sunak’s announcement, we now have confirmation that the furlough leave scheme is to remain in place until 31 October this year.
However, the terms of the scheme are due to change with effect from 1 July and it is important that you familiarise yourself with these changes – we have summarised them for you below.
The good news is that from next month you will be able to use furlough leave alongside part time working hours, which could be very useful – see below.
The bad news is that there is a cut-off date for putting new employees on to the furlough leave scheme and so you need to decide quickly how you want to use it.
The key changes are:
There is a deadline for adding new employees to the furlough scheme of 10 June 2020
The cut-off date for furloughing an employee for the first time will be 10 June 2020. It appears that you will not be able to put anyone new on furlough leave after this date.
This means that if you have any employees who have not yet been on furlough leave at any point, and you know or suspect that you might want to be able to put them on furlough leave between now and 31 October 2020, then you should put them on furlough leave on or before 10 June 2020 and leave them on furlough leave for a minimum of three weeks – remember, as this is before 1 July 2020 you cannot permit them to do any work for you during this time.
Remember, when putting new employees on furlough leave you must make sure that you have some form of written documentation to support the fact that you have agreed furlough leave with them – this can be in the form of an exchange of emails or a signed copy of a letter/ agreement.
From 1 July, you will be able to utilise furlough leave alongside part time working hours
This means that the ban on employees working for you during furlough leave will be removed, with effect from 1 July 2020. This will enable you to bring employees back in part time – the holding note on the guidance indicates that this return to work can be for any amount of time, so there are no minimum/ maximum hours, and on any shift pattern.
You can keep the employee on furlough leave for the remainder of their normal working hours and claim the relevant proportion of pay for those hours not worked. For example, you could bring an employee back in 2 days per week and furlough them for 3 days per week, and claim the relevant % of their pay for those 3 days.
This has several advantages. For example:
- if you have staff who have been off on furlough leave, you can bring them back in to work on a part time basis, and continue to access this form of financial support while you wait for workload to increase;
- if you have been operating with a skeleton crew working flat out while their colleagues are on furlough full time due to the restriction on working during furlough, you can now choose to mix this up so that all staff are doing some work and having some rest time;
- you can choose to create part time shift patterns and prevent cross over between shifts to help with social distancing and reduce the risk of spread of infection – which may feed into your COVID-Secure risk assessment (see here for free advice and tools on becoming COVID-Secure https://www.newdawnresources.co.uk/news/becoming-a-covid-secure-workplace).
The amount of money the employee receives will remain the same
The commitment from the Chancellor is that employees will still receive 80% of pay up to a cap of £2,500 per month.
The amount you can claim will change month by month
We had seen indicators of this. Fortunately, the approach taken by the government to this is gradual and not as onerous as expected. It will apply as follows:
- June – no change: you will still be able to claim the full amount (i.e. 80% up to a cap of £2,500 per month plus employer’s NI contributions and employer’s pension contributions up to the auto-enrolment cap).
- July – no change: you will still be able to claim the full amount (i.e. 80% up to a cap of £2,500 per month plus employer’s NI contributions and employer’s pension contributions up to the auto-enrolment cap).
- August – you will still be able to claim 80% up to a cap of £2,500 per month, but you will become responsible for paying the employer’s NI contributions and employer’s pension contributions up to the auto-enrolment cap.
- September – the 80% will be split 70-10, so you will be able to claim the 70% of wages up to a £2,190 cap, but you will become responsible for the other 10% as well as all employer’s NI contributions and employer’s pension contributions up to the auto-enrolment cap.
- October – the 80% will be split 60-20, so you will be able to claim the 60% of wages up to a £1,875 cap, but you will become responsible for the other 20% as well as all employer’s NI contributions and employer’s pension contributions up to the auto-enrolment cap.
If an individual is working part time and furloughed part time, the amount you claim will be reduced pro-rata to the days they are on furlough.
The furlough scheme will close altogether from 31 October and is not expected to be re-opened in any form in the event of a second surge in the virus
We now await the more detailed guidance on the new version of the scheme, which is due to be published on 12 June 2020.
As always, if we can be of any assistance in interpreting and applying the rules, or if you need to make changes to your staff arrangements including changing hours of work or looking to redundancies, then please let us know.