Extension to the Coronavirus Job Retention Scheme (“furlough scheme”)

On 12 May, Chancellor Rishi Sunak announced that the Coronavirus Job Retention, or “furlough” Scheme was to be extended, providing additional support for wages until October.

In that announcement, he said that the scheme under current rules would be extended until the end of July, but thereafter there would be a winding down of the scheme, with employers required to contribute and part-time working being a possibility.

On 29 May the Chancellor added a little more meat to the bones of this announcement and also changed it slightly in response to pressure from business groups.

The headline points are as follows:

• the last day for employers to put staff onto the furlough scheme is 10 June 2020 if they haven’t furloughed that particular staff member for at least three weeks previously – please be mindful of this if you are rotating staff or still unclear of whether you will need staff moving forwards. This is because the scheme is closed to new entrants from 30 June, and the individual will need to have been furloughed for at least three weeks prior to this at some stage
• the flexibility to the furlough scheme has been brought forward, to commence from 1 July 2020 – from this point staff will be able to work part-time and be furloughed part-time, and businesses will decide how to effect this in practice. This is likely to be of real benefit to businesses who are trying to operate again but either don’t have a need for a full cohort of staff or cannot have everyone in for safety reasons
• the furlough scheme will close on 31 October 2020.

From 1 August 2020, the furlough scheme’s support begins to be wound down:

• in August, businesses will take over the responsibility of paying employer’s national insurance contributions and pension contributions, and will no longer be able to reclaim them through the scheme
• in September, the reimbursement will drop to 70% of salary (to a cap of £2,190 per month). In order to be eligible for the grant, businesses must top up to at least 80% of salary
• in October, the reimbursement will drop to 60% of salary (to a cap of £1,875 per month). In order to be eligible for the grant, businesses must top up to at least 80% of salary.

We are still awaiting the updates to the Treasury Direction and the Employer’s Guidance which are expected by 12 June.

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This information is correct at 11.00am on 1 June 2020.