EMPLOYMENT LAW

Flexible furlough and the months ahead

On Friday 29 May 2020 the Chancellor announced further details about the extension to the Coronavirus Job Retention Scheme (CJRS). These details include the introduction of flexible furlough and outline how the scheme will operate over coming months with the introduction of a new taper system requiring employers to contribute to furloughed salaries from August. This should enable employers to determine how they can transition staff returning to work, and/or whether businesses need to adopt alternative workforce planning techniques such as reductions in salary, lay off or redundancy. The forthcoming changes focus on supporting businesses with phasing staff back to work.

 

Cut off for new entrants

The CJRS will close to any new entrants on 30 June 2020. New entrants will be those who have not completed the minimum furlough period of three weeks by that date. Therefore the last date any new entrant can be placed on furlough to avail of the Scheme is the 10 June 2020. Therefore it is vital that employers act now to consider the months ahead as much as possible. We appreciate it may be difficult to know when your business can reopen or what the demand for your goods or services may be whilst lockdown is phased out. Accordingly you should seek legal advice on the options that are available for you to best manage your workforce over the coming months.

 

Flexible furlough

Many employers have found themselves in a difficult position as engaging full time employees on a part time basis, in the form of short time working, results in employees receiving less salary than they would if furloughed and not providing any work. However, from 1 July 2020 employers have the flexibility to bring back those previously furloughed employees on a part-time basis. This is hugely beneficial to those employers who have some work available but not enough to bring their employees back on a full time basis.

From 1 July until the end of August the government will pay 80% of wages for any of hours an employees does not work up until the end of August. This flexibility comes a month earlier than previously publicised. Employers are required to pay for the cost of the time staff are working.

Employees will be able to work as much (or as little) as your business requires. Employers will be required to submit payroll data on the usual hours an employee would be expected to work in a claim period and actual hours worked.

 

If your employees do not need to work flexibly

If your employees are unable to return to work from home or if you do not have work for them to do, employers can continue to furlough these employees until the end of October at the latest. However the government’s contribution is going to reduce in the months ahead.

 

Employer contributions

HMRC guidance sets out that the following will apply:

June and July

The government will continue to pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. There is no requirement for employers to pay anything and the current position remains as is.

August

The government will continue to pay 80% of wages up to a cap of £2,500. Employers will pay Employer National Insurance Contributions and pension contributions. This equates to around 5% of the total employment costs that the employer would have incurred had the employee not been furloughed.

September

The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay Employer National Insurance Contributions and pension contributions and 10% of wages to make up 80%, up to the cap of £2,500. Therefore, the employer’s contribution will equate to approximately 14% of the total employment costs.

October

The government will pay 60% of wages up to a cap of £1,875. Employers will pay Employer National Insurance Contributions and pension contributions and 20% of wages to make up 80% up to the cap of £2,500. Therefore, the employer’s contribution will equate to approximately 23% of the gross employment costs.

 

The gradual reduction in furlough contributions will give businesses additional time to rebuild income and cash flows, however, without a timeline as to when certain businesses can reopen employer’s may still need to consider alternatives such as redundancy. We can assist you with navigating through the CJRS or any other measures affecting your workforce.

 

In order to discuss your business requirements over the coming months please contact us with any questions you may have.

 

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