Farewell, furlough

The Chancellor has announced important changes to the CJRS (furlough) scheme which will affect any businesses with staff currently on furlough, or which may wish to furlough staff before the scheme ends.

The Government has published a helpful factsheet summarising the details. Key points for employers:

• The scheme will close on 31 October 2020 as previously announced.
• From 1 July 2020, furloughed staff can return to work on a part-time basis. If you wish to do this, you will need to agree the terms in writing with the relevant staff and report their usual working hours and actual hours worked to HMRC when submitting your claim. The furlough grant will cover 80% of their wage costs for the proportion of their normal hours which they are not working and they will be entitled to pay under their employment contract for the hours they are working. The furlough pay cap will be adjusted proportionately. More detailed guidance on this aspect of the scheme will be published on 12 June 2020.
• From 1 August 2020, employers with furloughed staff will need to contribute to their furlough pay as follows:
  • From 1 August, employers will need to pay employer NICs and pension contributions in respect of furlough pay
  • From 1 September, employers will also need to pay 10% of wages (and the furlough grant will cover the remaining 70%)
  • From 1 October, employers will need to pay 20% of wages (and the furlough grant will cover the remaining 60%)
• The latest date by which any businesses can furlough staff for the first time is 10 June 2020. From 30 June the scheme will be closed to new entrants. Claims can be made under the new scheme from 1 July 2020.

What employers need to do now:

• Assess which (if any) staff they may want to return part-time from July onwards and consider on what terms they should return. It may be worth informally gauging willingness/ability to return to work, bearing in mind that childcare and health issues will affect this. In anticipation of the further guidance due on 12 June, employers will want to ensure that their systems can accurately record hours worked.
• If any additional staff are to be furloughed, this needs to be agreed with those staff promptly in time for 10 June.
• For some employers, the extra costs from 1 August onwards will not be feasible and they may need to consider redundancies or other cost-saving measures. Depending on the numbers affected, collective consultation obligations may apply.

The guidance about the mechanics of part-time return is eagerly awaited.  Given the short timescales now in play, we can only hope that it is not subject to multiple revisions like previous guidance.