Furlough: Beginning of the wind down - Nigel Tillott of Davies and Partners
On Friday, Rishi Sunak announced the progressive wind down of the furlough scheme.
Whilst more detail is awaited particularly around the mechanics of mixing part-time working and furlough leave, there is now a fairly clear timetable against which businesses can start to plan their strategy: -
June 10 - This is the last day upon which an employer can furlough an employee for the first time. As before, the minimum period of furlough leave is three weeks.
June 30 - The furlough scheme is not available for any employees not previously furloughed. It will be noted that the closure date is effectively June 10. However, it would appear that if an employee has been previously furloughed but doesn't happen to be furloughed in June, that employee could be furloughed subsequently. However, in line with the policy to get people back to work, employers will not be able to claim in any month for more employees furloughed than have been furloughed in previous months.
July 1 - For the first time it will be possible for employees to be partly furloughed and to work part-time hours. It would appear that employers will be able to choose the hours to suit, the employee will be paid in full by the employers for those hours and the employer will be responsible for tax and National Insurance contributions on those payments. The employee will need to specifically agree to the new arrangements and subject to that the furlough scheme and Government payments will still apply to those hours when the employee would normally be working but is on furlough leave.
August 1 - From this date the employer will be required to pay Employee National Insurance contributions and pension contributions for furloughed employees.
September 1 - From this date the Government will reduce its payments to 70 per cent of pay up to £2,190 and the employer will be required to pay the remaining 10 per cent meaning that employees still receive a minimum of 80 per cent of pay subject to the cap of £2,500.
October 1 - From this date the Government contribution will reduce to 60 per cent with a maximum payment of £1,875. The employer will be required to top this up to 80 per cent subject to the £2,500 cap.
October 31 - After this date the scheme will be no more.
For many employers there will be some serious thinking and planning to do at this point. What is demand likely to be like in the short and medium term, who do I need to bring back and when, will part-time hours assist, will redundancies be required and is there scope for other measures such as the agreement of longer term part-time working or a need to get agreement to reduce pay in the short or longer term?
Add this to the headache of detailed risk assessments and the safe physical return of employees to the workplace and life for employers promises to be very challenging over the next few months.
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