COVID 19: Furlough Scheme Update

Chancellor Rishi Sunak has announced reforms to the Coronavirus Job Retention Scheme with long-awaited details on how this will be wound down by October. 

Updates to the Treasury Direction and Government’s Employer’s Guidance are still to be published, in the meantime these are the headline points announced at his press conference.

10 June 

This will be the last day that employers can place employees on furlough. A ‘Flexible Furlough’ scheme will be introduced as a new scheme, with the current system coming to a close on the 30 June, to allow them to complete the minimum three weeks required by the current scheme before it comes to an end.

1 July

Flexible furlough’ is being introduced, meaning employees will be able to work part time or on a reduced hours basis and be furloughed part time. This means that the employee will still get an amount from the job retention scheme for the hours the employee is not working. Businesses will decide how that will work in terms of the time split.

For example-  If a worker returns to work or three days a week, the employer will pay these three days in full as usual, whilst continuing to claim 80% of the employee’s wage cost through the furlough scheme for the other two days.

1 August

Employers will not have to contribute to the scheme until August. From the 1st August, the government will still cover the cost of wages, but employers will have to pay employees national insurance contributions and pension contributions and can no longer reclaim them through the Coronavirus Retention Scheme. Sunak has said that this averages about 5% of total employment costs.

1 September 

The Government will only reimburse 70% of wages (up to a maximum of £2,190). Employers will be required to top up to 80% (or more depending on what the employer agreed with the employee), on top of national insurance and pension contributions.

1 October

The Government will only reimburse 60% of salary (up to a maximum of £1,875) and employers will continue having to top up to 80% (or more, subject to what the employer has agreed with the furloughed employees). The furlough scheme will close on 31 October 2020.

self-employed

Following the pressure to extend the self-employed income support scheme after its closure last weekend, the self-employed with applications opening in August for a second and final grant. However, the grants will be dropped to 70% of earnings, or a maximum of £6,570 for three months to bring this in line with the new job retention scheme.

job creation scheme

Ministers have told the Financial times that the Government is planning a job creation scheme to address the danger of mass-unemployment. Details are yet to be released; however, it is likely that this will focus on upgrading infrastructure, including broadband and green energy projects.

 

Do you have any questions? Proelium Law is here to help you. We are continuing to work during this difficult period. Call or email us if you have an enquiry, we will call you back at a time convenient for you.

 

 

Need advice?
Contact us to discuss your requirements and how we can help 

Proelium Law LLP

Proelium Law LLP is a Limited Liability Partnership registered in England and Wales No.OC411568.

Proelium Law LLP is authorised and regulated by the Solicitors Regulation Authority No. 629608 (www.sra.org.uk)

VAT Registration No. 242 4002 59

D-U-N-S Number 21770643

 Copyright © 2020 Proelium Law LLP All rights reserved. Use of this website constitutes acceptance of the Privacy Policy.  Web Consultancy | Pier9

Pin It on Pinterest