Latest Furlough Updates - June 2020
Posted on 2nd June 2020 at 16:21
We have produced a free short guide for small business owners on the latest updates to the Government's Job Retention Scheme from HMRC, also known as the ‘Furlough’ scheme. This guide has been produced in response to questions from our clients throughout May and since the scheme extension was announced on 29 May 2020. Here is a quick summary:
The Scheme – Quick Reminder
• A Furloughed employee is someone on temporary leave of absence from work. A furloughed employee is someone who is kept on the payroll during a period where the employer does not have any work for them. By designating employees as “furloughed”, you will be able to recover wage costs via the Job Retention Scheme. This means that your furloughed employees will still receive at least 80% of their wage from you even though they are not doing any work until August 31 2020. It is a way of avoiding unpaid lay off or redundancy and allows you to keep employees on until you can provide work again.
• The scheme is open to all UK employers that had a PAYE scheme in place on or before 19 March 2020, have enrolled for PAYE online and have a UK bank account. Any organisation with employees can apply, including charities, not for profit organisations and recruitment agencies. HMRC’s online portal launched on Monday 20 April 2020. The scheme can be backdated for furloughed workers from 1 March 2020 and it will take around 4-6 days for the grant to come through. The scheme was initially in place for 3 months from 1 March. As of 11 May 2020, it has been extended until the end of October 2020.
How is the scheme going to work from June onwards?
Existing scheme closure and ‘flexible furlough’ means that from June onwards:
The old Scheme will close to new entrants on 30 June;
From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June;
Employers who want to place new employees on furlough must do so by 10 June so the minimum three-week period required can be achieved;
From 1 July, flexible furlough can be used; for example, an employee who works 5 days a week can be brought back to work for 2 days a week. The employer will pay wages for those 2 days as normal. The Scheme will “continue to cover” the employee for the other 3 working days;
There will be no change to the level of financial assistance provided by the scheme during June and July;
From the start of August, employers will begin to contribute to furloughed employees’ wage costs on a phased basis;
The scheme will close at the end of October 2020.
3 KEY ACTION POINTS TO REVIEW
1. Make sure you have furloughed any employees by 10 June 2020 otherwise they will be ineligible for the scheme.
2. Ensure that due process is followed and written confirmation to and from the employee to protect your business from any employment related claims.
3. Ensure that you are using the correct calculations in relation to the starting point for employee pay in your business plan for employees going forward; AND ensure that your calculations reflect the reduced support in August, September and October respectively.
For a full copy of our PDF Guide to the Furlough Scheme please email email@example.com
We recommend that any changes to employee contracts are only made with the support of a fully qualified HR professional. This advice is provided as guidance and without liability.
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