The Government has clarified how the furlough scheme will work for those who can only return on reduced hours.
The Government has updated its guidance on the furlough scheme and the new ‘flexible furlough’ to outline how it will work if employees are only brought back part time.
From July a person who is full time can be brought back part time and furloughed for their remaining hours, with the Government paying a proportion of the furloughed hours. Wage caps are proportional to the hours an employee is furloughed so if, for instance, an employee is furloughed for 60% of their normal hours they will be entitled to pay of up to 60% of the £2,500 a month cap which applies to people who are furloughed full time.
Under the scheme, until August the Government will pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee is on furlough. Employers will have to pay employees for the hours they work.
From August, the Government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay ER NICs and pension contributions for the hours the employee is on furlough.
From September, the Government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
For October, when the scheme ends, the Government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
Employers can still choose to top up employee wages above the 80% total and £2,500 cap for the hours not worked at their own expense, but they will have to pay their employees for the hours worked.
Kate Palmer of HR experts Peninsula said: “It seems as though the system is indeed more flexible than the original rules with the minimum three week period of furlough being removed; the new scheme allows flexible furlough to last for any amount of time. However, employers will need to be aware that the minimum claim period allowed is seven calendar days.
“The second ‘phase’ of the Job Retention Scheme is a marker for its gradual conclusion, which is expected at the end of October 2020. While some employers will be relieved that they are now permitted to meet growing demands from their customer base with a mixture of furlough, work and financial assistance from the government, the new scheme will not offer help to those who cannot yet open. Coupled with the introduction of employer contributions to wage costs, the impending end of the scheme will not be good news for all.”
Meanwhile, the Treasury Select Committee says the Treasury should move to help those who have fallen through the gaps in the UK government’s COVID-19 income support schemes, saying more than a million people have been unable to benefit from initiatives designed to support salaried employees and the self-employed. The committee identified five specific groups in need of greater support: those newly in employment; the newly self-employed; self-employed people with annual trading profits in excess of £50,000; directors of limited companies who take a large part of their income in dividends; and freelancers or those on short-term contracts.
The call came as the Chartered Management Institute [CMI] published a survey showing that 34% of managers at UK firms are set to make staff redundant due to the impact of coronavirus, with 26% saying the job cuts could come this year. The poll shows that 6% of companies expect to lay off more than 500 workers, while 18% will fire more than 100. The CMI analysis found that just 22% of managers expect their businesses to be back to normal by the end of the year.