During today’s Downing Street coronavirus briefing the Chancellor has announced the changes to the Coronavirus Job Retention Scheme to be implemented between 1 July 2020 and 31 October 2020 when it ends. The Chancellor said, as we re-open the economy the furlough scheme can’t continue indefinitely. Employers will be asked to contribute to the scheme in the final phase.

The Chancellor also confirmed flexibility is needed but this is needed sooner than the 1 August 2020 date previously announced. A more flexible scheme is to be introduced from 1 July 2020. From this date employers may start to bring back staff on a part time basis and still access the furlough scheme. If, for example, a full time employee is ask to work 2 days per week from 1 July, the employer would pay the employees normal wages for 2 days and the other 3 days per week would be covered by furlough.

As this is a significant change to the scheme, the old scheme will cease on 30 June 2020 and be replaced by the new scheme. Only employees registered on the old scheme will be able to be furloughed on the new scheme and this means an employer wishing to take advantage of the changes needs to have registered their employees as furloughed by 10 June 2020 (this is so they qualify for the scheme by being furloughed for 3 weeks before it closes).

In addition to the flexibility changes the Chancellor is now asking employers to contribute towards the scheme however the amount received by employees will remain at 80% of wages up to £2,500 per month. These contributions will be reflected in a change of rates as follows:

• No changes for June or July 2020. The furlough scheme will continue to cover 80% of wages up to £2,500 per month and the associated employers National Insurance and pension contributions.
• During August 2020 the furlough scheme will cover 80% of wages only and and employers will have to pay the associated employers National Insurance and pension contributions.
• For September 2020 the furlough grant will cover 70% of wages and the employer will pay the remaining 10%, employers National Insurance and pension contributions.
• In October 2020 the furlough grant will cover 60% of wages and the employer will pay the remaining 20%, employers National Insurance and pension contributions.
• The furlough scheme will then cease on 31 October 2020.

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This article is published for information only. It provides only an overview and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the above can be accepted by the author or the firm.