Furlough Scheme Latest
The latest on the Coronavirus Job Retention Scheme (CJRS) includes details of the reductions in support as the scheme winds down between July and October this year. Inevitably, these changes have led to many employers, large and small, considering the viability of maintaining workforces and many are beginning to consult on redundancy processes. HM Revenue and Customs published its updates to the official guidance on 12 June 2020 and we outline the key changes below.
From previous updates, we knew that from 1 July employers will only be able to furlough employees who have already been furloughed. Prior to 1 July their furlough period was a minimum of three weeks, meaning that the last date on which employers could furlough employees for the first time was 10 June.
The updated guidance provides that employers will be able to implement ‘flexible furlough’ from 1 July, including part-time arrangements, and the minimum furlough period (currently three consecutive weeks) will no longer apply – flexible furlough agreements can last for any period. The updated guidance also states that the employer will be required to ‘keep a new written agreement’ when implementing flexible furlough. Our view is that this can be achieved by an exchange of emails on the subject – the guidance does make clear that the employee does not have to provide a written response, but it always makes sense to have evidence of their consent.
Under ‘flexible furlough’ employees are paid by the employer in full for the hours actually worked, with CJRS grants remaining available for part payment of the remainder of their normal hours which they do not work. There is no fixed pattern which needs to be adopted – the hours and shifts can be adapted to suit your business, as long as the employee agrees. There is also a worked example of how to calculate pay for a flexibly furloughed employee.
The new guidance sets out in greater detail how the CJRS grants will be tapered over the next few months:
- 1 August – employers will have to pay employer NI contributions and employer pension contributions, CJRS will continue to pay 80% of wages up to a cap of £2,500;
- 1 September, as well as the employer NI & pension contributions, employers will pay 10% of wages, with the CJRS contribution reducing to 70% (capped at £2,187.50); and
- 1 October – as well as the employer NI & pension contributions, employers will pay 20% of wages, with the CJRS contribution reducing to 60% (capped at £1,875)
- 31 October – scheme ends.
In good news for those returning from family leave, the updated guidance also acknowledges the announcement made by HM Treasury on 9 June that the 10 June cut-off for furloughing employees for the first time will not apply to those returning from maternity, adoption, paternity, shared parental or parental bereavement leave. Those employees will still be eligible for the furlough scheme, even if they have not previously been furloughed by 10 June, provided that the employer has used the furlough scheme for other eligible employees by that date.
For some employers struggling to keep their businesses afloat, inevitably those increases in costs towards keeping staff furloughed, will prove a tipping point in decisions about redundancies. We will be providing further updates about restructuring options and the interaction between furlough, consultation period, notice requirements and redundancy payments. If you do wish to speak to us about your business’s plans for the coming months please do get in touch.