Changes to Government Support for Employers with Furloughed Employees - Blog Header

Changes to Government Support for Employers with Furloughed Employees

Employers – are you ready?

The Government has announced changes to the support for employers with furloughed employees.

Furlough of employees becomes more flexible from 1st July, but the rules become more complicated. The new version of the Coronavirus Job Retention Scheme (CJRS) is extended to 1st October. Employers will be able to have employees working part-time and furloughed part-time. However, the employer must have furloughed staff by 10th June and claimed under the current version of the CJRS to be eligible.

The changes to the CJRS are part of the Government’s phased approach. The aim is to re-start the economy and support businesses in getting staff back to work. Employers will be able to put staff on part-time furlough, claiming the CJRS grant for a portion of their salary.

However, with the three-week minimum furlough requirement under the current rules, it must be remembered that any new period of furlough leave must have started by 10th June 2020. This is so that they can complete the three weeks before the current scheme ends on 30 June. This will ensure that the employee remains eligible from 1st July.

There will also be a new limit to the number of staff included on a claim as of 1st July.  Claims will be limited to the maximum number of staff ever included in any single claim under the current scheme.

Unfortunately, the new CJRS grant will no longer cover employers’ National Insurance or the employer’s pension contributions for furloughed employees. So, from 1st August, employers will have to cover these payroll costs.

Claims in July will be available as under the current scheme. So, the Government will fund 80% of gross pay up to a maximum of £2,500 per employee.  However, from 1st July, claim periods will no longer be able to overlap calendar months.

The support for the remaining months from August to October will be reduced and employers will have to meet part of the pay for the furloughed employee:

  • From 1st September the CJRS will pay 70% of wages, while employers will have to fund the other 10%. Also, a new minimum reporting period of one week will apply.
  • From 1st October the CJRS will pay 60% of wages while employers will take on the remaining 20%

Employers need to understand that the employee will continue to receive their salary entitlement in full, as set out by the terms of their employment contract. It is the grant, claimed by the employer, that is being reduced whilst the employee is furloughed.

Where employers bring staff back to work part-time, the business must meet the cost for the time they work. The grant will be available only for the cost of their furloughed hours. Employers will need to report the hours actually worked and the usual hours an employee would be expected to work in a claim period.

The original scheme only covered 1st March 2020 to 30th June 2020. Therefore, the furlough scheme will be closed to new entrants after 30th June 2020.

A factsheet outlining the changes is available from gov.uk.