Coronavirus Job Retention Scheme

The Chancellor recently set out more detail on how the Coronavirus Job Retention Scheme will continue to support jobs and business as people return to work. Here’s what we know so far:

  • From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time. This is a month earlier than previously announced to help support people back to work. Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them – and will be responsible for paying their wages while in work.
  • From August 2020, the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work. That means that for June and July the government will continue to pay 80% of people’s salaries. In the following months, businesses will be asked to contribute a modest share, but crucially individuals will continue to receive that 80% of salary covering the time they are unable to work.

To enable the introduction of part time furloughing, and to support those already furloughed back to work, claims from July onwards will be restricted to employers currently using the scheme and previously furloughed employees. The Coronavirus Job Retention Scheme will close to new entrants on 30 June, with the last three-week furloughs before that point commencing on 10 June.

From 1 July, employers will be able to agree any working arrangements with previously furloughed employees.

The scheme updates mean that the following will apply for the period people are furloughed:

  • June and July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.
  • August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs 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 ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.

Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked. Employees who believe they are not getting their 80% share can also report any concerns to the HMRC fraud hotline and HMRC have confirmed that they will not hesitate to take action against those found to be abusing the scheme.

Whilst the introduction of part-time furlough a month sooner is welcomed, the system will become more complex to manage and care needs to be taken to ensure staff are paid the correct amount and claims to HMRC are accurately calculated.

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