Changes To Furlough – What You Need To Know

Last Friday, Chancellor Rishi Sunak led the Daily Coronavirus briefing, and revealed that the Government’s Job Retention Scheme, also know as furlough would be changing in the coming weeks and months. 

So what does this mean?

Wednesday 10th June 2020, will be the last day that employers can place employees on furlough, for the first time.

From Wednesday 1st July 2020, rules to the furlough scheme will change. Enabling employers to ‘bring back’ staff on a part time basis. The furlough scheme will continue to pay the remaining hours that the employee is not physically working.

Employers are able to decide the hours and shift patterns for employees returning to work. Employers are then responsible to pay wages in full whilst the employee is working.

The working arrangements that are agreed should cover at least one week and be confirmed to the employee in writing.

Please note, an employee can work for as much or as little for the businesses as is deemed necessary. There is no minimum time that employers can furlough staff for.

If there is no work available for employees at the current time, they can remain on furlough as they have done.

Are furlough payments changing?

The short answer to this is yes. Although, the employee on furlough should in theory see no difference to the amount of money they have been receiving – 80% of a wage capped at £2,500.

However, an employers contribution will be phased in over the coming months, in an attempt to ‘wind down’ the furlough scheme.

In June and July, the Government will continue to pay the furlough scheme (80% capped at £2,500), as well as employer National Insurance and Pension Contributions for the hours the employee doesn’t work.

Any hours an employee works will be paid for by the employer.

Employers will have until the 31st July to make any claims in respect of the period to 30th June 2020.

In August, employers will pay the employer National Insurance and pension contributions of staff who are furloughed.

In September, the Government will pay 70% of the furlough costs (capped at £2,187.50). Employers will continue to pay employer national insurance and pension contributions. However, they will now have to pay 10% of employee wages.

In October, the Government will pay 60% of the furlough costs (capped at £1,875). Employers will continue to pay employer national insurance and pension contributions. However, they will now have to pay 20% of employee wages.

The furlough scheme will close on 31st October 2020.

Guidance from HM Revenue & Customs is available to read here.

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