The Government’s Coronavirus Job Retention Scheme (CJRS) will operate on its current basis until the end of June.
As the scheme stands, any employees furloughed under the scheme cannot carry out any work for their employer (or a connected company), and HMRC will reimburse 80 per cent of the worker’s pay (up to a maximum of £2,500 per month) plus the employer’s NIC and minimum automatic enrolment employer pension contributions.
From July 1 the scheme is evolving to allow employers greater flexibility and giving the opportunity to bring employees back to work on a part-time basis, with the remainder of the pay being covered by HMRC (again, up to a maximum of 80% or £2,500).
Briony McDermott, employment solicitor at Wake Smith looks at the changes.
“The changes to the scheme will take effect from 1 July, rather than from 1 August as originally expected. The amendments mean that furloughed workers can return to work on a part time basis which offers additional flexibility to both employers and employees. Employers must pay the full employment costs in respect of any part time hours worked by furloughed workers, with the government topping up any shortfall to the existing 80% threshold.”
The main changes are:
- From 1 July employees can return to work on a part- work, part-furloughed basis
- From 1 August 2020 employers must pay employees for any hours worked and meet 100 percent of the employer’s NIC and minimum pension contributions due on payments to furloughed workers, regardless of whether they relate to working or non-working hours.
- Furloughed employees will remain entitled to receive at least 80 per cent (or £2,500) of their reference pay for non-working time, subject to a cap, but the portion of reference pay covered by the CJRS will reduce to 70 per cent from 1 September 2020, and to 60 per cent from 1 October 2020, meaning employers will have to pay 10% and 20% respectively.
- The employer must fund the difference between the reducing grant and the minimum payments to furloughed workers in respect of their non-working hours.
Briony added: “Before these changes come into effect, employers should assess the impact on their businesses of increased flexibility on working and reduced financial support, and what this means regarding new or continuing participation in the CJRS.
“An employee can only be furloughed on or after 1 July if they had previously been furloughed for a minimum period of 3 weeks prior to 10 June 2020.
Briony added: “Whilst the flexibility is welcomed, this is a complex issue for employers. They should urgently consider how these changes will affect their businesses, and the practical implications for return to work planning.
“Employers should also enter into new written furlough agreements with employees who are to work on a part time basis whilst furloughed.
“Employers should also ensure their criteria for selecting which furloughed workers will return to work part time – and what hours they work – are fair, reasonable and objective and neither directly, nor indirectly, discriminatory.
“Employers can also consider other approaches to managing people costs, such as lay-offs, short-time working, or other flexible working arrangements.”
For further employment law advice contact Briony McDermott at Wake Smith Solicitors on 0114 266 6660.
