Furlough scheme will change from Wednesday 1 July 2020

Kathryn Hirst Kathryn Hirst|  Partner
Employment / Commercial

For the rest of this month and next (July 2020), the Government will continue to pay 80% of the furloughed employee’s salary, subject to the £2,500 cap.

The Chancellor, Rishi Sunak recently announced that the furlough scheme will change from Wednesday 1 July 2020 and that it will continue up until 31 October 2020. The scheme, however, closes for new entrants on 30 June 2020.  This means that the latest date employers can furlough an employee for the first time is 10 June 2020.

Employer Contributions 

As expected, employers will need to make, what the Government describes as a “modest contribution” to furlough costs.  There will be tapering as follows:

  • For the rest of this month and next (July 2020), the Government will continue to pay 80% of the furloughed employee’s salary, subject to the £2,500 cap.  This includes national insurance and pension contributions. Employers are not obliged to pay.
  • In August 2020, the Government will continue to pay 80% of the furloughed employee’s salary, subject to the £2,500 cap. Employers will have to meet the cost of employer national insurance and pension contributions.
  • In September 2020, the Government will pay 70% of the furloughed employee’s salary subject to a cap of £2,187.50.  Employers will have to contribute 10%, to make up to 80%. This will still be subject to the £2,500 cap and employers will also be responsible for employer national insurance and pension contributions.
  • In October 2020, the Government will pay 60% of the furloughed employee’s salary, subject to a cap of £1,875.  Employers will have to contribute 20%, bringing the payment up to 80% and subject to the £2,500 cap. Also, employers will pay employer national insurance and pension contributions.

Flexibility

From 1 July 2020, ‘flexible furlough’ will be introduced, this means an employee can work part-time and be furloughed part-time.  Employers will be able to decide how that works (in terms of the time split). They will be responsible for paying the employee their normal pay for such hours worked. They will be able to continue to claim under the furlough scheme for the balance of the employee’s normal but unworked hours.

New HMRC guidelines for employers will be available on/by12 June 2020.

We want to let you know that we are here if you require any further information our Employment Team can offer advice or guidance during this period of great uncertainty.   Please call us on 01603 751926 or email [email protected]