The Coronavirus Job Retention Scheme 2020, otherwise known as the furlough scheme (the Scheme), is set to close on the 31st of October 2020.
Initially, the Scheme allowed employers to claim back 80% of the wages of employees on furlough (up to £2,500 per month). However, from this month, with lockdown restrictions being lifted and more organisations and businesses returning to work, there are some changes to the Scheme that employers need to be aware of before they submit their next claim for reimbursement. This may also impact on how employers manage their staffing requirements this month.
From 1st September, the government will only contribute 70% of wages (up to a cap of £2,187.50) for the hours that employees are on furlough. This means that an employee can still be paid 80% of their pay during furlough but employers must pay at least 10% of the salary of any employee benefiting from the Scheme.
As a reminder, employers are required to pay the NI contributions and minimum statutory pension payments with respect to furloughed employees from 1st August.
The increase in employment costs may put employers in a troubling situation; trying to decide whether to keep employees furloughed (on a full time or flexible basis), ask them to return to work or consider redundancies.
Now may be the time to make some decisions as employers will be able to claim back a proportion of furlough pay during their notice period. This will not be an option once the Scheme ends on 31st October 2020.
If you need any further guidance in relation to furlough or redundancies, please get in touch with our legal team.
