As the end of the furlough scheme is now in sight, we wanted to summarise what this means in practice and flag today’s deadline.
Furlough scheme will close on 31 October 2020
The Treasury has said some 8.9 million workers are now covered by the government’s furlough scheme, with more than a quarter of the UK workforce now being supported by it, at a cost of £19.6bn so far. The fact the furlough scheme will close on 31 October 2020 is therefore of huge significance for many employers and employees, and it is widely thought that large scale redundancies may follow.
Employers will need to start planning now
Whilst 31 October 2020 might still seem a long way off, employers will need to start planning now, especially as the deadline for employers to add new employees to the scheme is today, 10 June 2020. After this date, it will not be possible to furlough anyone for the first time. It is important therefore to ensure that if you wish to furlough any employees for the first time, you take action urgently today.
If you decide to add new entrants to the scheme, you will need to ensure compliance with the terms of the CJRS, which includes a written agreement documenting the changes to the employee’s terms and conditions of employment during furlough. We can help you with this.
Maximum numbers that can be claimed
Another consideration for employers is whether they need to increase the number of employees on furlough in these last 3 weeks of June, bearing in mind that from 1 July 2020 an employer cannot claim for more employees than the maximum number claimed for under any previous claim (e.g. if you have only claimed for 10 employees in any one claim period, going forward, your claim will be limited to 10 employees in the same period).
This could be problematic for those employers who have been rotating employees, if they wish to benefit from the ‘flexible furlough’ arrangements being introduced on 1 July 2020 (see below) and bring all employees back on a part time basis. This may require some careful planning.
Some increased flexibility
Although some parts of the furlough scheme are becoming more restrictive, there will also be some increased flexibility from 1 July 2020 as employers can bring employees back from furlough on a part-time basis. Employers will be required to pay employees in full for the days they work, but they can still claim under furlough scheme for days on which the employees are furloughed on a pro rata basis. This is good news for employers and employees alike as it will enable employers to bring employees back into the workplace on a gradual basis.
Also, from 1 July 2020, claim periods will no longer be able to overlap months and employers who previously submitted claims with periods overlapping calendar months will no longer be able to do so going forward.
Last but not least, from 1 August 2020 employers will have to start contributing towards the cost of furlough scheme. We have summarised the financial changes for employers below.
Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June.
Employers need to be considering and planning for what will happen at the end of the furlough period now, particularly if redundancies are envisaged, or other measures, such as variations to contractual terms.
Employer Contributions (maximum cap £2,500)
As with our other updates, this is only intended to be a summary and not specific legal advice. If you need any help or would like further information about how we can support your business, or advice generally about managing your workforce during these unprecedented times, please do not hesitate to contact the Employment Team.