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Startup Guides Jun 3, 2020 2 min read

If you want to furlough employees – you need to do it before June 10th (or July 1st)

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Rob Winspear

The Coronavirus Job Retention Scheme is changing!

Until now the scheme was super generous (80% of your team’s wages) and covered nearly every kind of worker in your business. 

This has been vital to keeping many businesses and individuals afloat, but as we have all heard and can recognise it has come at a significant cost.

Because of this cost, the government has announced some cut-backs to the scheme which will reduce its overall cost and help encourage a phased return to work.

No more new furloughs and ‘flexible-furlough’

Chronologically speaking, the first new announcements are that from 1 July, no new employees can be furloughed. 

Secondly, from 1 July, furloughed employees can be flexibly furloughed. In other words, part-time furlough and part-time working. For any days the employee is back at work, they need to be paid at 100% of their normal salary. This is a significant change to the rules as previously the rule was that if you are furloughed, you could not do ANY work for the company, and doing so would constitute a fraud if the company then claimed a furlough payment for the day any work was done. 

These changes are also significant when you consider them against the existing rule that any furloughed employee must be furloughed for at least three continuous weeks before the company is eligible to receive a reimbursement. 

Connecting the dots, this means that if you are intending to furlough any more of your staff (who have not previously been furloughed) and intend to utilise the part-furlough-part-work relaxation that takes effect from 1 July then, you MUST furlough those members of staff by 10 June, otherwise they will not have served their minimum 3 weeks before flexible furlough begins. If you furlough those members of staff after 10 June, you will have to wait three weeks before you can take advantage of flexible furlough, whenever that may be. 

Direct reduction of government financial support

The next announcement is that from 1 August, the government will no longer pay employer’s NIC or pension contributions. This is the first direct reduction in the amount of support the government is committing to offer to businesses.

Following that, from 1 September, employers must pay 10% out of the 80% the government has previously been reimbursing (so the government will only provide 70% of an employee’s normal salary).

From 1 October, employers must pay 20% out of the 80% the government has previously been reimbursing (so the government will only provide 60% of an employee’s normal salary).

End of the Road

Lastly, the government has confirmed that the scheme will not continue past 31 October 2020. After October 31, that’s it.

If you would like more information please contact us.

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