The Government’s furlough scheme has provided much-needed financial support to business and the self-employed. It is estimated there are currently 8.4 million people being paid through the furlough scheme as well as a further estimated 2 million self-employed receiving assistance.
When the Chancellor announced details of the Scheme on 20 March, it was initially backdated to 1 March 2020 for employees, subject to eligibility. Further guidance has also included that Office holders (including company directors), salaried members of LLP’s, agency workers and some workers may also be eligible for the Scheme.
The Scheme is open to individuals who were on the employer’s payroll (and notified to HMRC) on or before the 19 March 2020, a slight change from the previous date of 28 February 2020.
The Scheme offers a grant which covers the cost of wages to the value of up to 80% of their employees’ wages, capped at a maximum £2,500 per month plus the employers National Insurance contributions and minimum auto enrolment employer pension contributions for those who work either full or part time and who would have otherwise been laid off during the coronavirus pandemic.
Flexible Furlough – 1 July 2020
With the incremental easing of the lockdown, employers will be considering how they approach and manage the next few months to successfully support their businesses.
As of 1 July 2020, employers will be allowed to bring their employees back to work on a flexible, part time basis while still claiming under the furlough scheme for the remaining hours the employee would normally have worked (subject to the cap).
Employer contributions – August 2020 to October 2020
The Chancellor announced on the 29 May some further changes to be introduced from August to October. The contribution capped at 80% of furloughed wages will remain but employers will be expected to contribute the following, in order to ease the burden on the public purse.
· August 2020: Employers will be required to pay the employer national insurance contributions and employer pension contributions on the furlough pay.
· September 2020: Employers will also be required to pay 10% of employees’ pay, capped at £312.50 meaning the government will pay 70% of employees’ pay, capped at £2,187.50.
· October 2020: Employers will be required to pay 20% of employees’ pay, capped at £625 meaning the government will pay 60% of employees’ pay, capped at £1,875.
Important time limits to claim under the Scheme – 10 June 2020
In order for employers to benefit from the 1 July Scheme, the employer will only be able to claim for employees who have been placed on furlough leave by no later than 10 June 2020 (as they are required to have a minimum of three weeks prior notice to 1 July).