Covid-19, News

Furlough scheme changes

Furlough scheme changes

In a bid, no doubt, to control the ballooning costs of supporting the economy during a period of stagnation and to encourage a return to work for those not being made redundant, the Chancellor of the Exchequer has announced the new parameters of the Coronavirus Job Retention Scheme (otherwise known as the ‘furlough scheme’).

As many will already be aware, the scheme was due to finish at the end of October 2020 (which is still the case), and the changes that have been announced were already being anticipated.

At the time of writing, the official rules (contained in the Treasury Direction) and the government’s guidance have yet to be updated. However, the broad changes are set out below, from which it can be noted that the furlough scheme will gradually remove the level of financial support to employers.

  • As of 1 July 2020, it will be possible for employees to work part-time and to be part-furloughed
  • As of 1 August 2020, employers will have to pay employee’s NI contributions and any pension contributions, which until that point will continue to be covered by the furlough scheme
  • As of 1 September, the furlough scheme will only cover 80% of pay and the cap on that will be £2,190 per month. However, importantly, it should be noted that employers will have to ‘top this up’ to the level of furlough pay that was agreed with their employees
  • As of 1 October 2020, the scheme contribution will only be 60% of pay, with a cap of £1,875 per month and, likewise, employers will have to top up

The scheme will not be open for new furloughing after 10 June 2020.

We await the details of these new changes in the coming days.

This article is provided for general information only and is not intended to be nor should it be relied upon as legal advice in relation to any particular matter. If you would like more information on employment matters please contact Richard Berry at richard.berry@burlingtons.legal.

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