Extension To The Furlough Scheme

The government recently announced an extension to the Coronavirus Job Retention Scheme (CJRS) which involves a new scheme to run from 1 July 2020 until the end of October 2020. In case you missed it, the scheme was set up to help employers fund the wages of staff that are furloughed, (ie put on leave of absence), as a result of the impact of COVID-19. It was initially intended to run from March 2020 through to June 2020.

The scheme was initially set up to enable employers to reclaim 80% of their furloughed employees’ wages, up to a maximum of £2,500 per month which will continue to apply until the end of August 2020. However, for September the percentage will be tapered reducing to 70% with a maximum reclaim of £2,187.50, and then 60% for October with a maximum of £1,875, unless an employee is brought back to work, then conditions apply. The employer will still need to top up the salary for September and October to a minimum of the 80%.

The government will continue to pay the relevant employer’s NI and pension contributions on top of the salary claimed under the furlough scheme, up to the end of July 2020. However, from August this will stop, leaving the employer to pay all the employer’s NI and pension contributions.

From the start of July 2020, the scheme will be more relaxed and will give flexibility to enable employers to bring furloughed staff back to work on a part-time basis, and still benefit from the grant for the period when they are not working. This will then continue to apply through to October but on the new tapered basis. This gives much more flexibility and an employer can choose the days and hours the employee should work, in line with the requirements of the business. Further guidance on flexible furloughing and how claims are to be calculated is to be issued by the government on 12 June 2020, which will hopefully give some clarity as to whether it will be available to directors on minimal director salaries.

There are certain conditions of the scheme that still apply, and you can read more in our summary here. However there are additional conditions to the new extended scheme, the main one being that employers can only furlough an employee that has been furloughed for a 3 week period before the existing scheme closes on 30 June 2020. This means that the final date by which an employee must be furloughed for the first time is 10 June 2020 in order to qualify. The employer then has until the end of July 2020 to make a claim for June. From 1 July the maximum number of employees an employer can claim for in any period is capped at the maximum number they claimed for in any previous claim up to the end of June 2020. A separate claim will need to be made for each month in line with the rules in place for that month.

Like any change of contract and terms, there are HR requirements, and unless you already have such terms written into your original contract of employment you will need to agree the new arrangement with your employee in writing.

If you are considering furloughing an employee and have not done so to date, and need to utilise the CJRS grant for that employee over the coming months, it is important to make sure this is done before 10th June 2020.

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