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Chancellor announces update to Coronavirus Job Retention Scheme – key takeaways for employers

Chancellor announces update to Coronavirus Job Retention Scheme – key takeaways for employers

29th May 2020 - Published by Kuits employment team

The Chancellor, Rishi Sunak, has this afternoon announced how the Coronavirus Job Retention Scheme (furlough scheme) will operate until its close on the 30th October 2020.

As the Chancellor had previously indicated, in order to ‘re-open the country and kick-start the economy’ the furlough scheme will operate in a more flexible way and with a requirement for employers to contribute towards the salaries of its furloughed employees.

Employer Contributions

The contributions expected to be made by employers will work in the following way:

  • Until the 31st July the scheme will operate in exactly the same way as it has done since it started in March, i.e. employers will not be expected to contribute in any way towards the salaries of their furloughed employees (unless they choose to “top-up” salaries above the £2,500 monthly cap).
  • Between the 1st August and 31st August, HMRC will continue to pay 80% of furloughed employees’ salaries (subject to the £2,500 monthly cap), but employers will be expected to pay the national insurance contributions and employer pension contributions (HMRC will no longer pay these costs).
  • Between the 1st September and 30th September, HMRC will pay 70% of furloughed employees’ salaries (up to a maximum of £2,190), with employers being expected to contribute 10% of employees’ salaries (or more, depending on whether the employer agreed additional top-ups).
  • Between the 1st October and the 30th October, HMRC will pay 60% of employees’ salaries (up to a maximum of £1,875), with employers being expected to contribute 20% of employees’ salaries (or more, depending on whether the employer agreed additional top-ups).
  • On the 30th October the Coronavirus Job Retention Scheme will then close.

Flexible Furloughing

The Chancellor also announced that the scheme will operate flexibly from the 1st July 2020 to allow for ‘flexible furloughing’. From the 1st July, employers will be able to ask their furloughed employees to work part-time without breaking their furlough leave. This means that an employer could ask an employee to work part of a week (when the employer will be expected to pay their usual salary) and leave their employee on furlough for the remainder of the week (when HMRC will pay their salary subject to the terms of the furlough scheme that are applicable at the time).

‘Flexible furloughing’ means that the Coronavirus Job Retention Scheme as it stands will come to an end on the 30th June; therefore, if any employers want to take advantage of the scheme as it is now, they must put their employees on furlough by the 10th June so that the minimum three-week period that an employee must be furloughed for can run its course.

As with the initial launch of the scheme, Employer and Employee Guidance and the Treasury Direction are expected to follow – and that will contain the detail.

Get in touch with an employment lawyer in Manchester

To speak to an employment lawyer about the scheme, or if you are considering redundancies or restructuring within your business, contact Kevin McKenna on 0161 838 7851 or email kevinmckenna@kuits.com.

Join us at our next HR Breakfast Club webinar on Thursday the 4th June, which you can sign up for here for the issues behind the headlines.

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