1st June - Furlough scheme update

Dear clients,

 

Last Friday the chancellor announced the changes that the government have made to the furlough scheme and the JRS payments. The current arrangement of them paying 80% of the average salary will continue until the end of August. However, there has been a change with regard to flexibility from the start of July and also changes re the levels of support. The changes announced are summarise below:-

 

      Flexibility

       From 1st July you can decide the hours and days that you want employees to work. For these hours you will have to pay the full 100% and bear the usual employers NIC and pension.
      Their work/furlough pattern must be for periods of at least a week and so an individual could work one type of pattern for a week and then it be changed for the next week. These are minimum periods and apply to each individual. So our understanding is that an individual could work Monday to Wednesday and be furloughed for the last two days, a second employee could work Wednesday to Friday, a third work the full week and the fourth be furloughed fully.
       The work pattern should, as the first furlough periods was, be agreed in writing with the employee.
      The claims will have to include the usual hours worked together with the actual hours. This is additional information to that which has been previously required.
      You can continue to furlough all or part of your workforce and until the end of August the grant given to support you shall continue to a maximum of 80% of their salary. There are however, changes to the NI and pension contribution support – see 2) below.

 

      Government support to change

       From 1st August the employer shall NOT be able to reclaim the NI and pension contributions.
      If you are entitled to Employers allowance on the NIC’s (up to a maximum of £4K p.a.) you can still use this but please be aware that we will already have been using it for your payrolls so far.
       From 1st September the grant support shall drop from 80% to 70%. This means that the £2,500 cap will reduce to £2,187.50/month and £504.81/week. The employer shall have to make up the difference of £312.50/month or £72.11 a week.
      From 1st October the support reduces further to 60% with the employer now making up the 20% difference = £625/month or £144.22/week.
      These caps will only apply to the furloughed hours and so if they are part working/part furloughed the JRS grant shall have to take this into account.

 

      Scheme dates

       If an employee has not yet been furloughed but you decide to now – probably exceptional – then you have until 30th June to register that person as being furloughed. The same rules apply as to when the scheme first started and so they will have had to be on the payroll and have been included  on a RTI return by 16th March.
      In order to have the minimum 3 week period they would have to be furloughed by 10th June to be accepted.

 

Please take all of the above into consideration when making decisions about what you are doing going forward with your business. It may still be preferential to remain furloughed but the basic initial decision is what does the business need to do to continue and continue profitably. In many businesses changes shall need to be made to offices or workshops/factories. In general a business needs to return to making sales and getting income but in some instances this is not possible. If you do return to work then you need to consider the likely sales volumes, the staff required to service that level and the safety measures required. A rough forecast would be good to do to see whether you can at least break even. If you wish to discuss this please contact me rather than Mandy as she is currently tied up running the office, the staff, controlling the furlough claims as well as doing her own work! I can always talk to her if I need additional information.

Stay safe

Hugh Voice