Since the start of the COVID-19 pandemic, many employers have been taking advantage of the UK Government’s Coronavirus Job Retention Scheme. This scheme was put in place to prevent employers from having to make mass redundancies during this difficult time. However, similarly to many of the other rules and restrictions put in place by the Government, things are beginning to change in relation to this scheme as more and more businesses begin returning to work.
Whilst, to begin with, many employers found this scheme fairly straightforward to understand, the latest updates regarding how this scheme will be continuing have left some employers confused about the future. So, to help anyone trying to get their head around how the recently announced changes to the Coronavirus Job Retention Scheme, our team here at Nationwide Employment Lawyers have explained what will happen over the next few months.
As we head into July, the Government will still pay 80% of your employees wages up to £2,500 when they are on furlough. They will also continue to pay your employer National Insurance Contributions and pension contributions whilst employees are on furlough too.
The big change to be aware of in July is that you can bring back any furloughed employees to work if you need them. There is no restriction on the minimum amount of time you bring them back for either, for this reason, this is being referred to as ‘flexible furlough’.
You should note that when bringing an employee back to work, you will be responsible for paying both their wage and their contributions for the hours they have worked. You can continue to claim for the hours they have not worked though.
From now on, you can not furlough any new employees either. So, the flexible furlough is only available for employees who have already been furloughed for any full three week period between 1st March 2020 and 30th June 2020.
Things begin to change slightly in August regarding what the Coronavirus Job Retention Scheme will pay for. The scheme will still cover 80% of furloughed employees wages up to £2,500, but this is all that they will pay for.
From August, as an employer, you will need to pay both the National Insurance Contributions and pension contributions for the hours that your employees are furloughed for as well as the hours they have worked.
In September things change again and it is likely that this change will have more of an impact on employers. Now, the Government will only pay 70% of furloughed employee’s wages up to £2,187.50.
This means that it is then down to employers to top up their employee’s wages by 10% to ensure that they are still receiving the 80% that there were in previous months. This 10% will be up to £312.50. Meaning the employee will still only receive up to £2,500.
Continuing from August, you will also still be required to pay the National Insurance Contributions and pension contributions for all of your employees, whether they are on furlough or not.
By the time October comes around, there will be another change to the amount of money the Government will pay towards furloughed employee’s wages. In October, they will only pay 60% of wages up to £1,875.
As expected, this means that as an employer you will need to top up wages by 20% to ensure that employees still receive 80% of pay. This 20% contribution will be up to £625. Again, you will need to continue paying National Insurance Contributions and pension contributions too.
All employers should also know that the Coronavirus Job Retention Scheme will close on 31 October 2020. So, you should ensure that you are bearing this in mind over the next few months and that you are prepared to have to pay all of your employee’s wages again.
How Nationwide Employment Lawyers can help
Hopefully, the information above will have cleared up any confusion you may have had in relation to the Coronavirus Job Retention Scheme. Of course, as the scheme begins to come to an end and you are required to contribute to your furloughed employee’s wages, if you find yourself in a complicated situation where you are unable to afford this, you may feel as though you have no option but to make some members of staff redundant.
If you would like to speak to an employment law specialist about doing so to ensure that you follow all of the steps required to prevent any potential issues surrounding unfair dismissals and discrimination, please contact our team here at Nationwide Employment Lawyers today. With many years of experience providing advice in relation to redundancy and unfair dismissals, you can trust we are the perfect people to reach out to in this regard.