This knowledge bite will focus on two important announcements; flexible furloughing and a closure deadline to any new entrants. We have summarised the key points below:
Closure to new entrants
The scheme will close to new entrants on 30th June 2020. From this point onwards, employers will only be able to furlough employees that they have previously furloughed for a full three week period prior to 30th June. This means that the final date by which an employer can furlough an employee for the first time will be 10th June 2020, in order for them to have completed a three week furlough period by 30th June.
For the avoidance of doubt, employees do not need to be on furlough on the 10th June if they have previously been furloughed – this announcement only applies to new entrants i.e. employees who have not been furloughed previously. For those employers who rotate employees every 3 weeks may continue to do so, providing the employee was furloughed before 10th June.
From 1st July 2020, businesses will be given the flexibility to bring furloughed workers back part-time. Full guidance is to be published on 12th June and we will update you further on the mechanics of this change in due course. From what we know thus far it is expected the minimum furlough claim period will reduce to one week (currently three weeks).
How much you can claim?
As per our previous guidance, the scheme has been extended until 31st October 2020 with the level of support provided by Government being progressively tapered down over the coming months.
- June and July – you can continue to claim 80% of wages up to a cap of £2,500 and the associated Employer NIC’s and Pension contributions.
- August – you can continue to claim 80% of wages up to a cap of £2,500, however you can no longer claim the Employer NIC’s or Pension contributions.
- September – you can claim back 70% of wages up to a cap of £2,187.50. Your furloughed workers are to continue to be paid 80% by you as the employer. At this point you are contributing 10% to their pay.
- October – you can claim back 60% of wages up to a cap of £1,875.00. Your furloughed workers are to continue to be paid 80% by you as the employer. At this point you are contributing 20% to their pay.
As always, the amount mixed practices can claim overall MUST remain in the same proportion as their private income over the duration of the scheme.
Our view & action point
Employers that haven’t furloughed an employee previously should do so before the 10th June in order to claim further funding. Accordingly, the key action point for employers is to decide on adding new entrants to the furlough scheme before 10th June, in order to have access to greater flexibility from 1st July. The extension of the scheme until October is very much welcomed despite the tapering down of financial support. The introduction of flexible furloughing is also positive news, as it allows employers and employees to go take a phased approach in returning to normal operating capacity.