Coronavirus Job Retention Scheme: Extension and Changes For Employers

The UK Government provided an in-depth review of the current JRS details following an update that there would be changes and increased flexibility to the funding to allow some businesses to begin taking the steps of re-opening.

As with the previous update – the JRS will continue through to October 2020, with employees on furlough continuing to receive 80% of their salary up to the £2,500 monthly cap.

However, as we move into August, the contributions which will change. As of August, employers will be required to pay the employers national insurance and auto-enrolment pension contributions towards the furlough amount – with the Government no longer providing relief for these costs.

In September, employers will pay these national insurance and pension contributions as well as begin contributing 10% of the furlough pay to the employees, with the Government scaling down their own contributions to 70% – meaning that employees will still be able to retain their 80% wage claim for the month. October will see this figure rise to 20% contributions from employers and a 60% contribution from the Government to allow employees to continue receiving their 80% furlough wage.

The Government will also be implementing a flexible approach to furloughed employees from the 1st of July to allow some employees who have been furloughed to return to work on a part-time basis (although no official guidance on part-time hours has been announced). The calculations of wage contributions for employees that are able to go back to work part-time will be that if an employee can only return for 1 or 2 days rather than a full 5-day working week, that the employer will cover the cost for those days worked and the furlough scheme will continue to provide financial relief for the other days that the employee stays home and is unable to work. As the contribution percentage from the Government decreases, the £2,500 cap will also drop to a pro-rata amount to reflect this. In September when the Government contribution drops to 70%, the maximum claim per employee will reduce to £2,187.50 and the 60% contribution in October will then be capped at £1,875 per employee.

The furlough scheme claims eligibility will also be changing. The last chance to register new furloughed employees as part of the scheme will now be the 30th June, meaning if employers wish to furlough new employees they will have to have done so by the 10th June to allow them time to complete the minimum 3-week furlough period in time.

An extension of the Self-Employment Income Support Scheme has also been announced, with applications opening in August for a second and final single-installment grant to cover 70% of three months of average monthly profit up to a cap of £6,570.

You can find more information on the Government’s dedicated Business Support Page.

This is, of course, an ever-changing situation and with each day comes new information. We will, as always, continue to update you as and when required in line with the UK Government advice and information release, but should you have any questions or concerns, please don’t hesitate to get in touch and we’ll do our best to assist where possible.