Chancellor Rishi Sunak has today announced further details of how the Coronavirus Job Retention Scheme will change in the coming months. From 1 July 2020, employers will be able to bring furloughed workers back part-time and, from 1 August 2020, employers will be required to contribute to the wage subsidy on a phased basis (albeit at a lower contribution that previously anticipated).
Employers who place workers on furlough (i.e. stand them down without work) are currently able to claim a reimbursement of 80% of the workers' wages up to a maximum of £2,500 per employee per month under the Scheme. At the moment, workers cannot do any work for the employer while on furlough.
However, the Chancellor has today announced that the following changes will be made to the Scheme:
- From 1 July 2020, employers will be able to bring furlough workers back part-time. This is a month earlier than previously announced and is designed to help support businesses reopening. Significantly, employers will be responsible for paying workers' wages while at work, with the Government subsidy only applying when workers are not working.
- For June and July 2020, the Government will continue to cover 80% of furloughed workers' wages up to the cap of £2,500 per month, as well as employer NICs and minimum employer pension contributions on those wages.
- For August 2020, the Government will cover 80% of wages up to the £2,500 per month cap but employers will have to pay the associated employer NICs and pension contributions on the wages themselves.
- For September 2020, the Government will cover 70% of wages up to a cap of £2,187.50 per month. Employers will have to pay the additional 10% of wages to make up a total of 80% up to the cap of £2,500 (plus employer NICs and pension contributions on the total wages).
- For October 2020, the Government will cover 60% of wages up to a cap of £1,875 per month. Employers will have to pay the additional 20% of wages to make up a total of 80% up to the cap of £2,500 per month (plus employer NICs and pension contributions on the total wages).
Under these arrangements, employees will need to receive at least 80% of their wages up to the cap of £2,500 per month during any furlough under the Scheme. As set out above, the employer would be responsible for paying wages in respect of any work done. It is not clear whether those wages would then reduce the overall amount to be reclaimed under the Scheme. Further guidance on these changes is expected in the coming weeks.
The Scheme is due to end on 31 October 2020. However, the Scheme will close to new entrants on 30 June 2020. Employers wanting to put any new employees on furlough will therefore have to do this by 10 June 2020 in order to benefit from the Scheme.
When submitting a claim under the Scheme, employers will be required to submit data on the usual hours an employee would be expected to work in any claim period, along with the actual hours worked. While these arrangements will be welcomed by employers, they will involve significant additional administration.
As now, employees are encouraged to report abuses of the Scheme to HMRC.
If you would like to discuss these changes and how they might impact your future workforce planning, please get in touch with your usual Employment department contact.