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By Spencers Solicitors

  Spencers Solicitors    
  June 5, 2020

Flexible Furloughing - Key changes made to wind down the job retention scheme

With nearly a quarter of the UK workforce now taking advantage of the job retention scheme at an estimated cost of around 63 million to the government, it was always going to be an initiative that had a limited life span. Businesses have been waiting with bated breath to see what the implications looking ahead are likely to be for staff who are on furlough, and how soon the scheme will be amended so as to gradually taper down the amount of government contributions to the scheme, whilst at the same time introducing incrementally increased contributions from the Employer... The Chancellor made the following announcements on Friday 1st June to confirm the plan for the next few months.

So, what’s new?

From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time. This is a month earlier than previously announced to help support people back to work.

Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them - and will be responsible for paying their wages while they are in work.

£ - June and July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions.
Employers are not required to pay anything.

From August 2020, the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work. That means that for June and July the government will continue to pay 80% of people’s salaries.

In the following months, businesses will be asked to contribute a modest share, but crucially individuals will continue to receive that 80% of salary covering the time they are unable to work.

£ - August - The government will pay 80% of wages up to a cap of £2,500.
Employers will pay ER NICs and pension contributions
For the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.

£ - September: The government will pay 70% of wages up to a cap of £2,187.50.
Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.
For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.

£ - October: The government will pay 60% of wages up to a cap of £1,875.
Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.
For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.

Feeling foxed about all things Furlough? Contact our Employment team who will be glad to advise you further.


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