COVID19 Employers & Employees Update 1st June 2020

On Friday 29^th May 2020, the Chancellor announced the details of the extension to the furlough scheme which will apply from 1^st July 2020 to 31^st October 2020.

The extension to the scheme will not be available to any employees that have not previously been furloughed. Since the current scheme (which runs until 30^th June) requires that employees be furloughed for a minimum period of 3 weeks, this means that to be eligible for the extension to the scheme employees must have been placed on furlough no later than 10^th June 2020.

There are two main aspects to the extension to the scheme:

1)EMPLOYER CONTRIBUTIONS

There are going to be phased changes to the amount that the government will allow employers to claim in respect of furloughed employees. The basis of the calculation remains unchanged which means that for most employees it is based on either February 2020, their average earnings for 2019-20 or their wages for the corresponding month in 2019.

July 2020

Employers will be able to claim 80% of the employee’s relevant wage up to a cap of £2500, plus employers National Insurance & pension contributions in accordance with the calculation rules set out by the government guidelines.

August 2020

Employers will be able to claim 80% of the employee’s relevant wage up to a cap of £2500 but will NOT be able to claim for employer’s National Insurance or pension contribution. For many small employers, this change will have a negligible effect, because they were not entitled to claim for employers National Insurance as the cost was covered by the Employment Allowance.

September 2020

Employers will be able to claim 70% of the employee’s relevant wage up to a cap of £2187.50 but will NOT be able to claim for employer’s National Insurance or pension contribution. For many small employers, this change will have a negligible effect, because they were not entitled to claim for employers National Insurance as the cost was covered by the Employment Allowance. Employees will continue to be entitled to receive 80% of their relevant wage up to a cap of £2500 and employers will be required to pay this 10% shortfall.

October 2020

Employers will be able to claim 60% of the employee’s relevant wage up to a cap of £1875 but will NOT be able to claim for employer’s National Insurance or pension contribution. For many small employers, this change will have a negligible effect, because they were not entitled to claim for employers National Insurance as the cost was covered by the Employment Allowance. Employees will continue to be entitled to receive 80% of their relevant wage up to a cap of £2500 and employers will be required to pay this 20% shortfall.

2) PART TIME FURLOUGHING

From 1^st July 2020 employers will be able to bring previously furloughed employees back to employment on a part-time basis, with the government continuing to cover a percentage of the cost of their normal hours that they do not work in accordance with the details set out above.

Employers will have to decide the hours and shift patterns that their employees will work on their return. This should be agreed with their employees, must be equivalent to at least one week within the claim period, and be agreed with the employee in writing.

When making the claim employers will be required to submit details of the hours an employee would normally work and the actual hours that were worked within the claim period.