Last week saw the easing of restrictions that should assist with getting the economy moving again and getting businesses back on track.
There are have been no new grants or schemes announced recently, but changes to current schemes are coming as we approach the end of June. I will aim to summarise those changes, starting with the Job Retention Scheme and furlough.
Job Retention Scheme from 1 July
From 1 July , employers can bring furloughed employees back to work for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked. The grant will cover all the costs incurred i.e. the 80% paid to the employee, plus the Employer’s NICs and Auto Enrolment pension contributions for July. After that, it will be gradually reduced.
The flexible furlough also means you’ll no longer have to put employees on a minimum of 3 weeks furlough.
Note that there is no maximum length for claim periods that end on or before 30 June but claims for any periods starting before 1 July must end on or before 30 June. This is the case even where an employee furloughed in June continues to be furloughed full time in July. Separate claims will need to be submitted to cover the days in June and the days in July that you want to claim for, even if employees are furloughed continuously.
Claims for periods ending on or before 30 June 2020 must be made by 31 July 2020.
From 1 July, the scheme rules will change each month. This means that claim periods starting on or after 1 July must start and end within the same calendar month. You should aim to process the claim for the same period as your payroll run where possible – i.e. ideally make one claim per month for the whole month.
Job Retention Scheme from 1st August
From 1 August 2020, you will be asked to contribute towards the cost of your furloughed employees’ wages, with the level of grant reducing each month until it closes on the 31 October.
You must continue to pay the employee 80% of their wages when furloughed regardless of the reduction in grant.
The cap of £2,500 wages per month per employee remains, proportional to the hours an employee is furloughed e.g. an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours.
The reduction in the grant is as follows:
- For August, Government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough. Employers will pay ER NICs and pension contributions for the hours the employee is on furlough.
- For September, Government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
- For October, Government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
Employers will have to pay their employees for the hours worked at their usual rate. Employees also accrue holiday pay throughout the period they are on furlough.
Employers can continue to choose to top up employee wages above the 80% total and £2,500 cap for the hours not worked at their own expense if they wish.
For those clients who engage us to prepare their payroll, we will make sure all of this is processed as part of payroll procedures. If any client who doesn’t use us for payroll needs assistance, please get in touch.