Important Update on the Cornoavirus Job Retention Scheme

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The Chancellor has announced the expected changes to the furlough scheme and they are pretty fair. The simple details known so far are as follows, although we’ve have no doubt that this will be ‘fleshed’ out in the Government updates as they are published.

  1. The scheme will remain in its present form for those who need it until the end of July with no additional costs to the employer
  2. From August the employee will still receive 80% of wages when fully furloughed but the employer will no longer be able to reclaim the pension and NI contribution – they will have to meet that as usual
  3. From September the employer will be required to pay the pension and NI together with 10% of the 80% furlough wages that the employee receives
  4. From October that contribution from the employer will increase to 20%
  5. From 1 July there will be the introduction of a flexible furlough scheme where employees may be asked to come in to work on full wages for part of the week and receive the 80% of wages for the time they are not working (subject as above to the contributions set out)
  6. In September and October you can still use the scheme. You may still have some employees on furlough full time and they will be paid as in 3 and 4 above. You may also have employees on flexible furlough (see below)

The flexible scheme may well be exactly what many of you need – particularly where it is necessary to try and maintain social distancing but wanting all employees to make a contribution.

Here are a few examples of how the scheme could work for you:
  • In July you may ask an employee to return from furlough for 2 days per week. You will pay them 100% of their normal wages for those 2 days and you can still claim the other days at 80% plus pension and NI contributions
  • In August you may bring back more employees (or increase or decrease days of work) from furlough on, say, 3 days per week. You will pay those employees 100% of their normal wage for those 3 days. For the 2 days they are not at work you can claim 80% of their wages but you will have to pay the pension and NI contribution
  • In September you bring back more employees on flexible furlough working 3 days per week. You will pay 100% of wages for the days worked but will still be able to claim 70% of the employee’s wages for the days they do not work. You will, however, HAVE to pay 10% of their 80% wages (their income does not go down) and the employers’ NI and pension contributions
  • In October the employer contribution increases to 20% plus pension and NI and then closes on 31 October.
However, please bear in mind that employees can be flexibly furloughed and work for any number or days each week. There are no restrictions on whether they work 1 day per week or 4 days per week – you can still claim the furlough grant for the days they are not working.

Also, bear in mind that you will not be able to add additional employees to the scheme after 30 June and any new entrants MUST be registered on the HMRC portal no later than 10 June.

All in all we hope that this scheme will help to save all, or almost all, of the jobs in your businesses. We are aware how difficult this is for the hospitality, events and leisure industry as you do not yet have a definitive date by which you can open. However, allowing a flexible furlough system whilst your premises are only able to take a percentage of your normal customers should hopefully help to manage the easing of lockdown period.

We’ll will let you know as soon as we can if there is any more detail to come. We wanted to be sure that you had the information as soon as possible so that you can plan for the future.

Where it is possible to do so the Government guidance is that working from home should continue for those who are able to do so. People furloughed because of shielding (which has been extended for the foreseeable future) or because of childcare issues will be paid as set out above. However, those who are struggling with childcare issues should be able to potentially return at least part time when nurseries and other childcare settings such as childminders are allowed to open again. HOWEVER we do need to bear in mind that with July comes the school holidays and for many it is grandparents who bear the burden of childcare. We do not yet know whether restrictions will be lifted enough by then for grandparents to take on their usual caring roles. We’ll will keep you posted.

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