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Furlough leave has changed… What could that mean for you?

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You blink and there is another change as a result of the pandemic we are facing – whether it is what businesses are allowed to open up, how many metres apart we should be or whether you can benefit from one of the Government’s schemes such as the Coronavirus Job Retention Scheme.  It can be bewildering but we set out some key points below.

The Job Retention Scheme

So, the Job Retention Scheme hasn’t changed since it was introduced earlier this year. It was set up in March to help employers meet some of their employees’ wages who they furloughed (ie placed on leave and weren’t working for the employer). It was, and remains, a wage reimbursement scheme. The government pays a grant to employers for their wage claims for employees on furlough up to a cap.

Flexible furlough

In terms of changes, the bad news is that if you didn’t furlough an employee before the end of June then you can’t furlough them now, unless they are returning from some type of family leave or an armed forces reservist role.

On the upside, if you have been using the furlough scheme, from the beginning of July you can now flexibly furlough employees. This means your employees can part work/part be on furlough for any period of time. Although this is great – and what businesses have been asking for – the salary calculations do seem to be a little complicated. HMRC has various sets of guidance on the claims and calculations to help . The claim periods have changed too .

Employer contributions

Employers will also now be required to contribute towards the cost of employees being on furlough. Therefore, although it has been and will remain to be a massive help to struggling businesses affected by the impact of coronavirus, you do need to bear this cost in mind:

  • July – The Government will continue to pay 80% of salary up to a cap of £2500 plus associated employer’s National Insurance Contributions (NIC) and minimum auto enrolment pension contribution
  • August – You will have to start to make contributions as an employer. This starts with you paying the NIC and pension cost. The Government will continue to pay80% of wages up to the same cap
  • September – Employers will pay NIC, pension cost plus 10% of wages (up to £312.50 per employee). The Government will therefore pay 10% less –70% of wages up to cap
  • October – Employers will pay NIC, pension cost and 20% of wages (up to £625) and the Government will cover 60% of wages up to the cap

Regardless of the changes for employers, employees must continue to receive 80% of their wages up to the cap of £2500 throughout the life of the Scheme until it ends on October 31 2020.

With the flexible furlough option, businesses utilising it will be paying for the hours their flexibly furloughed employees are working and also for a proportion of their furloughed hours and associated costs from August onwards. The costs are rising but the hope is that, as the country tries to return to as close to normal as possible, demand for services and products will increase.

Employer bonus

Also don’t forget if you have got furloughed staff you can get a bonus of £1000 per each furloughed employee brought back to work and retained in employment provided the conditions are met.

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