The Coronavirus Job Retention Scheme is entirely changing as of 1 July 2020.

From this point, employees can be furloughed flexibly. This means that they can return to work part time and collect furlough payments for the hours they are not currently working, but under normal circumstances would work.

The employee continues to receive the minimum furlough pay for the furloughed hours, ie up to 80% of their monthly salary, up to £2,500 per month.

What are the conditions?

From the 1 July, grant claims can only be made if the employee was furloughed for at least 3 weeks before 1 March 2020 and 30 June 2020. As such, grants cannot be claimed for employees who have had reduced working hours throughout the pandemic. However, furloughed employees can be brought back on the same reduced hours and the grant can be claimed.

What do employers have to play?

Employees will continue to receive 80% of their wages. However employers must begin to meet some of the costs from 1 August.

  • 1 August – Government pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough. Employers pay ER NICs and pension contributions for the hours the employee is on furlough
  • 1 September – Government pay 70% wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers pay ER NICs and pension contributions, as well as topping up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500.
  • 1 October – Government pay 60% wages up to a cap of £1,875 for the hours the employee is on furlough. Employers pay ER NICs and pension contributions, and they must top up employee wages to ensure they receive 80% of their wages up to a cap of £2,500.

The scheme will then come to an end on 31 October 2020.

What are the timescales on claims?

From July 1 onwards, claims must start and end in the same calendar month, so if the pay period spans across two months, there will be two claims. This makes things easier to work out, since the amount that can be claimed varies from each month.

The furlough hours are the usual hours less the hours that the employee has worked in the month.

The minimum furlough pay is the lesser of 80% of the pay for the pay period and the maximum amount, divided by the employee’s usual hours and multiplied by the furlough hours.

For more information, use the Gov.uk website.

How are payments calculated?

An employee, who has been furloughed since 1 April returns to work in August 2020.

Usually, the employee works 164 hours a month.

However, they are not needed as much in work, and actually work 80 hours.

As such, the employee will be classed as a furlough worker for 84 hours (164-80).

In a regular month, the employee earns £2,000 per month. As 80% of this (£1,800) is less than the maximum amount of £2,500 per month, this is used to work out the minimum furlough pay.

The minimum furlough pay is £1,800 x 84/164 = £921.95 can be claimed by the employer for August.

The employer must continue to make up the shortfall to ensure the employee receives 80% of their pay for the furloughed hours.

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Any questions?

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