The Future of Furlough Leave: Preliminary Details Announced
Our Chancellor clearly has a penchant for Friday evening updates and at 5pm on Friday 29th May, Mr Sunak released further details relating to the future of the Coronavirus Job Retention Scheme.
Prior to Friday’s announcement, we knew that the furlough scheme was being extended until 31st October and we knew that the scheme would run unchanged until 1st July. We now however know more about how things will look post-30th June and we can confirm the following headline points:
- With effect from 1st July the furlough scheme will become “flexible”, allowing furloughed employees to work part time. Employees who are brought back on this flexible basis must be paid by their employer in full for any hours which they work with the government continuing to pay the 80% furlough pay for any time which the employee remains furloughed without work up to the existing cap of £2,500.
- Any work undertaken by a furloughed employee must be confirmed in writing and the minimum period of time that an employee needs to be working under any such flexible working arrangement is 1 week.
- From 1st August, the Scheme will continue in this same way: with employees still being able to be furloughed for 100% of the time or, less if there is work for them to do. The only change at this point will be that employers will need to pay their employee NI contributions and the statutory pension contributions: both of which are currently covered by the Scheme.
- From 1st September, whilst furlough pay for employees will remain at 80%, the government contribution to this will reduce to 70% or, a maximum cap of £2187.50. Employers will need to top up the extra 10% of furlough pay claimed under the CJRS for any hours not worked.
- Any drop in contribution will need to be agreed in writing with the affected employees.
- From 1st October, the government contribution will drop to 60% or a maximum amount of £1,875. Employers will be required to pay all costs NI, Pension and 20% of wages to make up 80% of furlough pay up.
- The government has not yet confirmed whether businesses that remain completely closed will still be subject to the same contributory drops.
- The Scheme will close and end completely on 31st October with no further state support available.
- Although we are waiting for further details, at the moment, it still seems possible for employers to force employees to take annual leave during any workless period during furlough leave.
- The CJRS is going to close to new entrants from 30th This means that from 1st July, employers will only be able to furlough employees who have been furloughed for a full 3 week period prior to 30th June. In practice then, the last date to furlough “new staff” will therefore be 10th June in order to give them the 3 weeks furlough leave before 30th June.
The government has committed to provide further details by 12th June but there have been some preliminary, headline updates to the official Government guidance which is accessible via the gov.uk website here:
An official News Story regarding the announcement has also been released by the government and this can be found here:
If you would like to discuss the most recent development at all or, if you would like to understand your options for flexing and managing your workforce in light of these developments please contact a member of the Employment Law team on 01274 864999.