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The Job Retention Scheme is changing – here’s how…

23 Jun The Job Retention Scheme is changing – here’s how…

As we look ahead to the scheme closure in October, we have outlined below the changes as they are proposed month to month:

1. From 1 July, flexible furlough begins:

As in the original guidance, it appears a further written agreement with employees is required to implement flexible furlough and we are advising clients to secure clear agreement to the terms upon which they intend to implement such arrangements. These are summarised and reviewed below:

• Subject to certain conditions (see below) you can bring employees back, part-time, for any hours.
• Employers pay in full for any hours actually worked by the employee.
• Note: there are a number of additional rules covering claim periods and the calculations for flexible furlough that appear rather complex – so do please map out your arrangements and talk to the team before implementing.

2. Who can use the extended and flexible scheme from July onwards?

• After 1 July, only those of your employees who have already been furloughed and for whom you’ve received a furlough grant / payment will be entitled to the protection under the extended scheme. So, that’s any of your employees who have been on furlough for a minimum of three continuous weeks prior to 30 June (hence the cut-off date of 10 June that was applied and now restricts access).

• Note: the above exclusions do not apply to employees returning from statutory parental leave after 10 June – those returning from maternity, paternity, shared parental leave, adoption leave or parental bereavement leave can still be furloughed after the 10 June for the first time – they are the exception you’ll need to be aware of. Please also note that you must also, in this case, have submitted a furlough claim for any other employee for three consecutive weeks during the period of 1 March and 30 June.

3. Convoluted claim periods and rules

The rules are convoluted. You can access them on the. Gov website.
The key points are summarised as follows:
• From 1 July, there is no minimum furlough period but the HMRC claim period that you can claim for is stipulated as ‘seven calendar’ days;
Except where the period claimed for includes the first or last day of the month, and you’re claiming for a period ending immediately before that, in these cases the claim can be for less than seven days;
• After 1 July, you can’t make claims across calendar months;
• Your claim period must start and end in the same calendar month;
• Days claimed in different months are claimed separately, in each month they relate to, as the rules on contribution values etc are different in each month, as the scheme contracts and closes down in October (see below).

4. Cap on total numbers for whom you can claim

• The new guidance has imposed a ‘maximum’ number of employees you can claim for under the scheme post 1 July;
• That number cannot be more than the maximum number of employees on furlough at the same time in any period before 30 June.
• Please do check this with our team to avoid planning for claims that are refused.

5. From 1 August 2020, grant levels start to reduce (please see the .Gov calculators to help you work out claims)

The government timetable for these changes is summarised below. The government has made clear that:
‘wage caps are proportional to the hours an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours’:

August:
Government pays 80% of wages up to a cap of £2,500 for the hours an employee is on furlough.
Employers pays ER NICs and pension contributions for the hours the employee is on furlough.

September:
Government pays 70% of wages up to cap of £2,187.50 for the hours the employee is on furlough. Employer pays ER NICs and pension contributions and tops up employees’ wages ensuring receipt of 80% of their wages up to a cap of £2,500, for time they are furloughed.

October:
Government pays 60% of wages up to a cap of £1,875 for the hours the employee is on furlough.
Employers pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
Wage caps are proportional to the hours not worked.
[extract from .Gov guidance]

Conclusions
The extension of the scheme and the scaling back on grants is inevitable. The key concerns here are:
• making sure you know how to claim;
• making sure you know what the maximum numbers you can claim for are, under the new guidance;
• securing clear contractual agreement to implement flexible furlough working; and
• ensuring the numbers and costs work.
Workforce planning and costing now is crucial and can save time and monies so please do contact the team if you need any support. We are helping a number of clients retain skilled workforces, save payroll costs and implement compliant schemes to reduce risks of claims…all helping survive this challenging time.