Insights

On 29^th May 2020 the Chancellor announced details of how the furlough scheme will operate from 1 July 2020.

Further support on how to calculate claims will be available online from 12 June 2020, but in the meantime, we are outlining the position below.

Firstly however, an important point to note is that the furlough scheme will close to new entrants from 30 June 2020. From that date onwards it will only be possible for employers to furlough employees that they have furloughed for a full three-week period prior to 30 June. In other words the final date that you can furlough an employee for the first time will be 10 June 2020, for the current three-week furlough period to be completed by 30 June.

Position from 1 July 2020

From 1 July businesses will have the flexibility to bring previously furloughed employees back to work on a part time basis. The government will continue to pay 80% of their wages for any of their normal hours they don’t work. Up until the end of August.

Each employer can decide the hours each previously furloughed employee will work and will be responsible for paying their wages in full whilst they are working, whilst the government will pay 80% of their wages for the hours they don’t work.

This provides flexibility for businesses to arrange for each employee to work as much or as little as the business needs, and there will no longer be a minimum period that staff can be furloughed for (unlike the current three-week minimum period).

If a working hours arrangement is agreed with an employee, it must cover at least one week, and it must be confirmed to the employee in writing.

The employer can then claim the furlough grant for that employee, for a minimum period of one week. Claims can however continue to be made for longer periods such as monthly cycles if preferred. It will be necessary to include within the claim, details of the employee’s usual hours of work and the actual hours they worked in the claim period.

Any employees not brought back to work can remain on full furlough and businesses can continue to claim the grant for their full hours under the existing rules.

Position from 1 August 2020 onwards

From 1 August the furlough scheme will be gradually tapered as follows:

• In June and July 80% of wages, up to a cap of £2,500 per month will be paid by the government together with employers’ NICs and pension contributions for the hours an employee doesn’t work; employers will have to pay all of an employee’s costs for the hours they do work;
• In August this 80% will continue, but the employer must pay the employers’ NICs in full;
• In September the government will pay 70% of wages up to a cap of £2,187.50 per month for the hours an employee doesn’t work. Employers must pay the employers’ NICs and pension contributions in full. The employer must also pay 10% of wages to make up 80% of the total, up to a cap of £2,500;
• In October the government will pay 60% of wages up to a cap of £1,875 per month for the hours an employee doesn’t work. Employers must pay the employers’ NICs and pension contributions in full. The employer must also pay 20% of wages to make up 80% of the total, up to a cap of £2,500;
• Note the caps on the furlough grant above will be proportional to the hours not worked by the employee.