Flexible furlough: Chancellor confirms changes to coronavirus job retention scheme

The Chancellor, Rishi Sunak, has provided more detail on changes to the coronavirus job retention scheme he announced earlier this month. The changes allow employers to bring furloughed employees back to work part time and require employers to start sharing the cost of furloughing employees.

Flexible furlough – bringing employees back part time

Businesses will be able to bring furloughed employees back to work part time from 1 July 2020, a month earlier than previously announced. Bringing this option forward by a month makes sense as more and more businesses are allowed to re-open but will not have enough work to bring employees back full time.

Employers will decide the hours and shift patterns their employees will work on their return and will have to pay their full wages while working. To be eligible for the grant, the employer will have to agree the new flexible furloughing arrangement with their employee and confirm that agreement in writing. 

When claiming the grant for furloughed hours employers will need to report and
claim for a minimum period of a week. This is a minimum period.  Employers making claims for longer periods such as those on monthly or two weekly cycles will be able to do so.

Employers will be able to claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. They will need to report hours worked and the usual hours an employee would be expected to work in a claim period.

Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June.

Employers to contribute to cost of furloughed employees’ wages

From 1 August 2020, the level of government grant will start to be tapered and employers will have to contribute to the costs of keeping employees furloughed.  This means that for hours the employee does not work for furlough periods in:

• June and July: The government will continue to pay 80% of wages up to a cap of £2,500, as well as employer National Insurance Contributions (NICS) and pension contributions.
• August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay the employer NICs and pension contributions.
• September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay employer NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.
• October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay employer NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.

The cap will be proportional to the hours not worked.

Employers will have to pay the full cost of employees’ wages for hours worked.

Employers will still able to choose to top up wages above the scheme grant at their own expense.

Closure to new entrants on 30 June

The furlough scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees they have already furloughed for a full three-week period prior to 30 June. This means that the final date by which an employer can furlough an employee for the first time will be the 10 June (so that the current three-week furlough period is completed by 30 June).

Employers will have until 31st July to make any claims in respect of the period to 30 June.

The number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim under the current CJRS.  We understand this to apply from 1 July, although this is not entirely clear.

From 1 July, claim periods will no longer be able to overlap months. Employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this. Employers can continue to make claims in anticipation of an imminent payroll run, at the point payroll is run or after payroll has been run.

Employers will be able to make their first claim under the new scheme from 1 July.

The scheme will close in full on 31 October 2020.

The government has issued a fact sheet explaining the changes.