Breaking News – Furlough Scheme Updated 29 May 2020

This evening Rishi Sunak finally revealed the Government’s plans for the remainder of the Coronavirus Job Retention Scheme.

In his speech at 17:00, he confirmed that employers will be able to bring employees back on a part-time basis from 1 July 2020 while still benefitting from the scheme. This will be welcome news to both employers and employees and will allow for a staggered reintroduction. The example the Chancellor gave, was an employee who ordinarily worked for five days per week, could return to work (and full pay) for two days, while being furloughed for the other three. Of course, the normal rules around contracts and employment law will apply and employers will need to agree these phased reintroductions with their employees.

As expected, the amount of the grant will also be reduced on a staggered basis – from 1 August 2020, employers will be required to meet the cost of National Insurance Contributions and the auto enrolment pension costs. That arrangement will last until 1 September 2020, from when the grant will be reduced to 70% and employers will be expected to make up the remaining 10%, then, from 1 October 2020, the tax payers contribution will reduce to 60%, with employers expected to make up 20%.

While the additional contributions may be difficult for businesses to stomach, this will mean that employers will only have been required to meet 5% of total employment wage costs for the life of the eight month scheme. Hopefully, as we approach the staging dates, most businesses will also have seen an increase in activity and profit as lockdown is released and we start to return to something close to normality.

The biggest headache for employers is likely to be employees who are reluctant or refuse to return to work as a result of the virus, whether that be out of concern for their health, the health of someone they live with, or due to childcare. Each situation needs to be analysed on a case by case basis and there is no one rule to suit all. However, employers should be mindful that employees are protected by the law if they refuse to return to work out of concern for their own or others health and safety.

The Chancellor has also confirmed that the self-employed scheme will be extended to allow one further payment based on three months worth of average monthly earnings capped at 70% of earnings or up to £6,500.