The 10 June 2020 marked the cut-off for new entrants to the Government’s Coronavirus Job Retention Scheme. Many have been lobbying the Government to deal with the disadvantage this could cause for employees who are currently on family leave and who would otherwise be prevented from being placed on furlough and place them at greater risk of being made redundant.
The Treasury have indicated they will address this in the revised guidance which we are expecting to be released on Friday 12 June, and have referred to the reassurance given in a statement by the Chancellor, Rishi Sunak that for parents returning from leave who are in need of support will be treated fairly and will be able to receive the financial assistance they and their family will need. Time will tell whether the Treasury has decided to soften the deadline for furlough for those returning from family related leave.
Coronavirus Job Retention Scheme, July 2020 and beyond
The way the Scheme operates will be changing as of 1 July 2020, and while we are waiting for the finer detail from the Treasury the key changes are:
- From 1 July 2020 the introduction of part time furloughing to support those already furloughed back to work. An employer will need to pay for any hours worked, and there is no limit on the number of hours an employee can work.
- There will be a gradual tapering of the payments made by government for the periods when employees are not required to work under the Scheme;
- July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance and pension contributions. An employer can elect to top up pay to 100%,
- August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay Employer NICs and pension contributions,
- September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay Employer NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500,
- October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay Employer NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.
The gradual withdrawal of government support is likely to force businesses to review their future viability and if it is necessary to make redundancies.
If you have any questions on the Scheme or relating to redundancies please contact Lucy Churchill, Senior Associate on 01603 677018