We now know more about how the extension to the Coronavirus Job Retention Scheme (CJRS) will work. Business owners need to take stock now and plan for the coming months with these five key actions.
1.The furlough scheme will close to new entrants from 30th June 2020, so the last date someone can commence furlough is 10th June 2020
The existing furlough scheme will close on 30th June 2020 and from this date employers will only be able to furlough employees that they have furloughed for a full 3-week period prior to 30 June i.e. 10 June 2020. Employers will have until 31 July to make any claims in respect of the period to 30 June.
Make sure all employees that you may need to furlough have been furloughed by 10 June 2020.
For existing employees on furlough, consider if you wish to extend beyond the previous furlough scheme end date of 30th June 2020. Make sure that you communicate and get employees written agreement to the extension, particularly if you have an existing agreed with a specific period of furlough.
2.Flexible furlough will start from 1st July 2020
Flexible furlough will start on 1st July 2020. This is a month earlier than the government previously planned and full details of the scheme will be announced on 12th June 2020, what we do know is that: –
- Employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked.
- When claiming the CJRS grant for furloughed hours employers will need to report and claim for a minimum period of a week.
- Employers will be responsible for paying wages for the hours an employee actually works.
- Start planning now so you can decide the approach that works best for you. Decide the hours and shift patterns that your employees will work on their return and start having conversations with them about returning to work.
- If you are unsure about future trading conditions, you do not have to bring employees back on part time hours in July, but we still recommend that you start planning for the future.
3.Tapering of the Government Grant will start from 1st August 2020
From August 2020 the level of government grant provide through the CJRS will be slowly tapered to reflect the fact that people will be returning to work.
That means that for June and July the government will continue to pay 80% of people’s salaries. In the following months, businesses will be asked to contribute as detailed below: –
- August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions.
- September: The government will pay 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: The government will pay 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.
Crucially though, individuals will continue to receive that 80% of salary covering the time they are unable to work.
If you have “topped up” employees’ salaries, consider if you can afford to continue to do this through the flexible furlough period. If you are going to cease the “top up” make sure that this is crystal clear in the any new or extended furlough agreement.
4.The scheme will end on 31st October 2020
The Chancellor confirmed that the scheme will finish at the end of October.
All employers should be planning now for the future, and if the likelihood is that in the absence of the furlough scheme you will need to make redundancies start consultation now and consider a slightly extended notice period of those furloughed employees who are fairly selected for redundancy.
5.Unsure about the future trading conditions – buy yourself some time
Not sure what trading conditions may be like in a few months’ time and you are not sure if you will need to make redundancies?
You could buy yourself some time by talking with your employees about this now and thinking about alternatives for when the furlough scheme ends such as: –
- Continuing with your own version of furlough but without the benefit of the government grant
- Bringing employees back to work on reduced hours or pay
- Bringing employees back to work on reduced pay but the same hours
- Offering unpaid or part paid leave or sabbaticals
Whatever you do make sure you follow all relevant consultation requirements and ensure all agreements are in writing and signed by the employee or their representative. For practical help on how to implement all of this please do get in touch on email@example.com or call 0203 239 3307.