Late last month, the government announced changes to the Furlough Scheme. Having seen more than 8 million employee benefiting from the scheme, at an approximate cost of £15bn, a gradual scale down has been introduced.
Key dates of the revised scheme are as follows:
1 July 2020: The Flexible furlough scheme comes into effect. Under this scheme, employers can agree with employees any level of part-time working without the employee coming off the furlough scheme completely. Employers will have to pay (the contractual pay) to the employee for the hours actually worked. Pro-rata furlough pay will be payable by the government for hours on which the employee is not working (subject to existing and changing limits, see below). Flexible working can be done on a week by week basis for the purposes of the furlough claim. We will review the flexible furlough scheme in more detail in a forthcoming blog.
1 August 2020: from this date employers will need to pay employer NIC’s and pension contributions on Furlough pay.
1 September 2020: from this date, government contributions will reduce by 10%. This means that the government will pay 70% of furloughed employee’s wages up to a maximum of £2,187.50 per month. Employers will have to make up the “lost” 10% of employee’s salary (up to £312.50) in addition to paying employer NIC’s and pension contributions. Failure to make the necessary top up could mean that employees are not validly furloughed (with potential claims from the employees and, possibly, HMRC).
1 October 2020: from this date, the employer must contribute 20% of the employee’s salary, i.e. up to £625.
31 October 2020: the furlough scheme ends.