Coronavirus - How the Furlough Scheme Is Set to Change
The Chancellor has announced changes to the Government's Coronavirus Job Retention Scheme which will come into effect from 1 July 2020.
We are still awaiting detailed guidance as to the operation of the Scheme from July onwards, but the main changes are listed below.
- From 1 July, staff will be able to undertake some work part-time and be furloughed part-time. It is anticipated that employers will need to pay staff in full for the part-time hours and can then recoup pay up to the relevant limits (ie ie 80% in July) for the furloughed element.
- Although employees who are furloughed should receive no less than 80% of their normal pay (capped at £2,500) for the duration of the Scheme, employers will have to start meeting some of the costs of the Scheme from 1 August as follows:
- From 1 August, employers will no longer be able to claim for the employee's national insurance contributions and pension contributions.
- From 1 September, employers will only be able to recoup 70% of salary (up to a maximum of £2,190), so will need to contribute 10%.
- From 1 October, employers will only be able to recoup 60% of salary (up to a maximum of £1,875) so will need to contribute 20%.
- It is anticipated that the Scheme will cease entirely on 31 October.
- To support the Government's wider aim of encouraging furloughed workers back to work, the Scheme will be closed to new entrants from 30 June. This means the last three week furlough periods need to commence by 10 June at the latest. Employers should consider whether to furlough staff ahead of this deadline.
