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For a few weeks there have been numerous rumours about the changes that will be made to the furlough scheme and when it will end. On Friday evening, the Chancellor formally announced what these changes will be (click here for the government’s summary of the key changes and click here for a useful fact sheet produced by the Treasury about how it anticipates the scheme will work going forward).
The employer’s guidance on the furlough scheme (click here) has not yet been updated with the more finer details of the changes but as soon as it is, we will let you know. In the meantime, we have summarised what we do know below.
What are the changes?
The key changes are as follows:
From 1 August whilst employers will still be able to claim 80% of the salary of furloughed staff (subject to a cap of £2,500 per month), employers will no longer be able to claim the cost of employer’s NI contributions and pension contribution costs.
From 1 September the government will reduce the grant that can be claimed in respect of salary costs for furloughed staff to the maximum of 70% of salary only, with a cap of £2,187.50 per month.
From 1 October the government will reduce the grant that can be claimed in respect of salary costs for furloughed staff to the maximum of 60% of salary of salary only, with a cap of £1,875 per month.
However, at all times, all furloughed staff will be entitled to receive at least 80% of their usual salary. Employers will therefore be obliged to cover the difference between the grant claimed and 80% of their usual salary (where the employee has agreed to a pay cut whilst furloughed), or, where no agreement between the employer and staff has been made about a pay cut, 100% of their salary.
This means that, for example, from 1 July where an employer asks a member of staff to work 50% of their normal working hours, the employer will be required to pay the full salary costs associated with the hours worked, but it can then claim a grant of up to 80% of the salary costs (subject to the tapering and maximum amounts set out above) in respect of the unworked normal working hours.
Employers will need to agree the part time furlough and working pattern with affected staff members and confirm this in writing.
What should employers do now?
The government has stated that further guidance on flexible furloughing and how employers should calculate claims will be published by 12 June. Once this guidance is received, will let you know.
This summary guidance note reflects our interpretation of the guidance at the time of writing. It should not be seen as a substitute to full legal advice and we would always recommend taking advice on your specific circumstances.
If you would like to discuss the scheme in more detail or have any other questions about managing your workforce, please do not hesitate to get in touch with our employment team. We'd be happy to support you. Email email@example.com or telephone 0113 849 4000.