Coronavirus: Furlough?: So what has changed?

Claire Vane
June 1, 2020

Following much speculation, on Friday 29th May, the Chancellor gave us more details of the applicable terms of the Coronavirus Job Retention Scheme (CJRS) from June to the end of October 2020.

He outlined a gradual shifting over the coming months of financial responsibility from the Government to employers, and the main points are as follows:

Flexible furloughing is to start from 1st July. Employers can bring back furloughed staff to work for any time on any shift pattern and continue to be able to make a claim under the CJRS for any normal hours not worked by their employees. Employers can make additional contributions if they wish. Employers will need to report and claim for the minimum of a one-week period. The scope for abuse is much greater than under the previous rules, so there will be audits and controls rigorously recording recalled staff and those who do not work.

Employers must agree with employees any new flexible working arrangements and this has to be confirmed in writing.

The existing furlough scheme will close from 30th June. That means that employers will only be able to furlough employees that have been furloughed for the full three-week period prior to 30th June. Note that the last day on which you can furlough an employee for the first time will be 10th June.

Employers will be required to make a growing contribution to wage and salary costs for furloughed staff and this is where we start to see responsibilities gradually moving back to employers, whilst still giving them scalable financial support. The caps below will be proportional to the hours worked, so if an employee works half a week, for example, the employer can claim £1,250 in respect of the unworked period.  

The key details and timing milestones are below:

June and July:

The Government will reimburse 80% of wages to a cap of £2,500 per month as well as Employer National Insurance contributions and pension contributions for any hours the employee has not worked.

August:

The Government will reimburse 80% of wages to a cap of £2,500, but – and this is new – employers will be required to pay the National Insurance contributions and pension contributions for the hours the employee does not work (and of course where they do) and will not be able to reclaim these through the CJRS.

Interestingly, Government information indicates that 40% of employers have not made a claim for employer National Insurance contributions or employer pension contributions under the CJRS and therefore they will be unaffected by these changes in August, provided their employee working patterns do not change.

September:

The Government will pay reimburse 70% of normal wages/salaries, up to a cap of £2,190 for any hours the employee does not work. Employers, though, will be required to pay employer National Insurance contributions and pension contributions plus – and this is new – 10% of wages/salaries to top up to the current 80% (or more depending on what has been agreed with the employee). The same cap of £2,500 is still applicable.

October:

The Government will reimburse only 60% of wages/salaries – and, this is new – up to a cap of £1,875 for any hours the employee does not work. Employers, though, will be required to pay National Insurance contributions and pension contributions and 20% of wages/salary to make up the 80% total. Again the £2,500 cap applies.

The furlough scheme will come to an end on 31 October 2020.

Further guidance is expected by 12th June on how to deal with flexible furlough claims.  

We are putting together lots of guidance for our clients on this. If you would like more help with the guidance please do not hesitate to contact us.

Overall, the news is good, in that this gives us the opportunity for tapering provisions that are gradual and therefore more generous to employers financially than rumours had led us to believe. It is hoped that by running the financial scheme in tandem with a ramping up of business, some of the cliff-edge concerns that many employers feared could happen, may be avoided. This could provide some much-needed breathing space and potentially delay, or even negate, some of the tough decisions that could otherwise become relevant.

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Claire Vane

Claire is the Managing Director and Founder of Integrated Resources. She is passionate about releasing potential in individuals and organisations.

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