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Furlough scheme changes – important dates and tapering of grant to 31 October 2020

01 June 2020

The Chancellor has now announced changes to the furlough scheme - with a tapering down of support from the end of July to 31 October 2020 when the scheme will close.

Updates to the Treasury Direction and the Employer's Guidance are awaited for full details, but here are some of the key points:

Important dates: 10 and 30 June 2020

  • To enable the introduction of part time furloughing (see below), and to support those who are already furloughed in getting back to work, claims from July onwards will be restricted to employers currently using the scheme and previously furloughed employees.
  • The scheme will close to new entrants on 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, in order for the current three-week furlough period to be completed by 30 June.
  • From 1 July, employers will be able to agree any working arrangements with previously furloughed employees.
  • When claiming the CJRS grant for furloughed hours; employers will need to report and claim for a minimum period of a week, for grants to be calculated accurately across working patterns.

“Flexible furlough” from 1 July 2020

  • From 1 July, employers will be able to bring back to work any employees who have previously been furloughed for any amount of time and any shift pattern. This means that employees will be able to work part-time and be furloughed part-time.
  • The employer will still be able to claim under the CJRS for such employees’ normal hours not worked, but will have to pay in full for any hours worked, and will be responsible for tax and NI contributions on those payments.
  • To be eligible for the grant, employers will have to agree with their employees any new flexible furloughing arrangement and confirm that agreement in writing. Further guidance on flexible furloughing and how employers should calculate claims is expected on 12 June.

Grant payments and tapering August to October 2020

The scheme updates mean that the following will apply for the period people are furloughed (assuming the employer has agreed staff are paid at 80% of wages during furlough leave):

  • June and July 2020: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.
  • August 2020: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions
  • September 2020: The government will contribute 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.
  • October 2020: The government will contribute 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.

The CJRS will close at the end of October 2020.

The aim of this extended scheme is to allow employers to ease staff back to work at the same time as, it is hoped, business levels resume.

For more details please see this gov.uk article:
https://www.gov.uk/government/news/chancellor-extends-self-employment-support-scheme-and-confirms-furlough-next-steps

This update contains general information only and does not constitute legal or other professional advice.

Employment law

Caroline Carr, Partner: E: cac@bto.co.uk / T: 0141 225 5263
Laura Salmond, Partner: E: lis@bto.co.uk / T: 0141 225 5313
Jacqueline McCluskey, Partner: E: jmcc@bto.co.uk / T: 0131 222 2936
Douglas Strang, Senior Associate: E: dst@bto.co.uk / T: 0141 225 5271

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