Getting ready for changes to the Furlough Scheme

Changes to the Coronavirus Job Retention Scheme from 1st July will allow employers to bring back staff who have been furloughed previously on a part time basis, but still class them as furloughed and be part-funded by the scheme. 

Employers will pay these furloughed employees their normal wage for actual hours worked and be able to make a claim for the hours not worked. 

The second key change will see an extension of the scheme until 31st October and a gradual reduction in the level of contribution the Government will make towards the costs of furloughed staff.  

Over the four months to October, the amounts you can claim will change as follows: 

• For July the level of contribution will be as before, with claims capped at 80% of the employee’s wages, with a maximum of £2,500 per month. 
• This cap level and contribution will remain for August, but you will no longer be able to claim for Employers National Insurance of pension contributions in respect of furloughed employees for that month onwards. 
• The level of contribution will reduce in September to 70% of employee’s wages, subject to a maximum of £2,187 per month. 
• This contribution level will reduce again in October to 60% of employee’s wages, subject to a maximum of £1,875 per month. 
• The scheme will end on 31st October. 

The extension to the furloughing scheme has been welcomed by most and the introduction of flexible working arrangements should help businesses start to re-open as the nation recovers from this crisis. 

Eligibility for the Furlough Scheme 

As well as part time working now being allowed, there are other points employers should be aware of: 

• Only claims for staff who have already been furloughed for at least three weeks by 1st July will be allowed. 
• From the same date, the number of employees an employer can claim for in any given claim period cannot exceed the maximum number they have claimed for in any individual previous claim. 
• There are specific rules in place for employees returning from parental leave. 

These new rules reflect the Government’s view that the extension to the scheme is to support those previously furloughed returning to work and not where employers are looking to furlough additional employees. 

How will the claims work? 

The claim system used will be as before, but there are some important new rules you need to consider: 

• Claims for periods on or before 30th June must be made by 31st July. 
• Employers will need to calculate ‘normal’ wages for those they intend to bring back on a part time basis. This should be relatively simple for those employees on regular contracted hours. Where employees are on variable hours there are specific rules around how normal pay is calculated and its likely these calculations will be complex and time consuming. 
• Where staff are returning on a part time basis the employer will need to record the numbers of hours they have worked. 
• Claims will need to be adjusted month by month to reflect the transitional rules on what can be claimed. 
• There are new rules in place to deal with any under or over claimed amounts in previous claims. 

What to do next if you are an employer 

Business owners and employers need to review the upcoming changes and consider the following action points: 

• Identify those employees who can return, whether full time or part time. 
• Write to each returning employee, as done when they were originally furloughed, setting out plans for their return. Separate HR/legal advice may be needed here. 
• Put systems in place to record any part time hours worked to support flexible furlough claims. 
• Look at the calculations needed to support furloughing claims and decide how these will be done, and who will be completing them. They are likely to be complex for those on variable hours. 
• Consider the impact of the phasing out of the scheme on their businesses’ cashflow.
• Seek help, advice and support where needed. 

How we can help 

There are several ways in which we may be able to help. It is always important to get good advice and this is particularly true in turbulent times like now. If you need help please talk to us on 020 3196 4888 or use our online enquiry form. We can offer initial consultations, guidance and support over the phone if you have any concerns about face-to-face meetings. 

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Last updated: 19th June 2020