So far, the Coronavirus Job Retention Scheme (CJRS) has helped 1 million employers across the UK furlough 8.4 million jobs. The scheme has been running since March and it was announced last month that the scheme would be extended to October, with more flexibility from July to support the transition back to work.
Following Chancellor Rishi Sunak’s announcement on Friday regarding changes to the furlough scheme from 1st July, these are the key points employers should be aware of:
How much will employers be expected to contribute?
The Government will continue to pay 80% of staff salaries up to a cap of £2500 per month during June and July with employers not required to contribute anything, however from 1st August employers will be expected to contribute to the scheme.
From August furloughed employees will continue to receive 80% of their salary up to £2500 per month, however, the employer must pay National Insurance and pension contributions.
Then from September, the Government will pay 70% of wages up to a maximum of £2190 per month with employers paying 10% of the employees’ wages to make up the 80% total, up to the maximum £2500 per month. Employers will also have to pay National Insurance and pension contributions.
In October, employer contributions will rise to 20% of wages and the Government will pay 60%, again up to the cap of £2500 per month, with employers continuing to pay National Insurance and pension contributions.
Employees may return part-time from July
In addition to the changes to employer contributions to the furlough scheme, the Chancellor also announced more flexibility was being introduced to allow employers to bring back staff who have previously been furloughed part-time from 1st July.
From July, employers will be able to bring staff back for any amount of time or shift pattern according to business needs but will be required to pay staff 100% of their staff wages for the hours they work. The employer can still claim the Coronavirus Job Retention Scheme (CJRS) grant for the remainder of the employees’ 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.
Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June.
When does the scheme end?
The Coronavirus Job Retention scheme will continue until the end of October, however the scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June.
This means that the final date by which an employer can furlough an employee for the first time will be 10 June, in order for the current 3 week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.
How is the Self-Employment Income Support Scheme changing?
The Self-Employment Income Support Scheme (SEISS) has so far seen 2.3 million claims worth £6.8 billion. To be eligible to claim under the scheme, individuals will need to confirm that their business has been adversely affected by coronavirus, and they:
- Earn at least half of their income through self-employment.
- Have trading profits of no more than £50,000 per year.
- Traded in the tax year 2018 to 2019 and submitted their Self Assessment tax return on or before 23 April 2020 for that year and intend to continue trading.
There are two grants available and individuals can continue to apply for the first SEISS grant until 13 July. The taxable grant is worth 80% of average monthly trading profits capped at £7500.
Those eligible under the scheme will be able to claim a second and final grant in August. The grant will be worth 70% of their average monthly trading profits capped at £6,570 in total.
An eligible individual can claim for the grant in August even if they didn’t claim for the first grant. Further guidance on the second grant will be published on 12 June.
What if the support available isn’t enough?
It is hoped that the furlough and Self-Employment Income Support Schemes will help protect the economy and enable employers to retain staff who would otherwise have been made redundant. However, inevitably there will be businesses for whom the support simply isn’t enough to prevent redundancies. A recent survey of 500 HR professionals by People Management Magazine found that nearly half of employers that have furloughed staff still anticipate having to make redundancies when the government’s job retention scheme comes to an end.
If you are considering making redundancies at this difficult time, it is worth noting that employers must still comply with the normal procedural requirements in relation to notice and consultation before making employees redundant, however they are not prevented from making redundancies whilst employees are furloughed or when the scheme ends.
Our employment law team are available to offer support and advice to any employer considering redundancies. Our team can guide you through the process and ensure you follow guidelines to prevent issues arising in the future.Contact us today