Thu. Apr 25th, 2024

Rebecca Harding-Hill, Partner and Lydia Moore, Associate, Employment & Labor Group, Bryan Cave Leighton Paisner LLP, considers the impact of changes to the Government’s Furlough Scheme

Last week, Chancellor Rishi Sunak announced the detail of further key changes to the Coronavirus Job Retention Scheme (the “JRS”).

As of 1 August, the JRS will no longer be 100% government-funded; employers will need to pick up some of the costs for their furloughed workers. From 1 August, employers will no longer be able to reclaim the costs of employer NICs or pension contributions. From 1 September, employers must contribute 10% towards the pay of furloughed employees, with the government paying 70%, and from 1 October the employer/government contribution split will be 20%/60% (this ensures that those furloughed continue to receive the 80%, capped at £2,500 per month).

From 30 June, the Scheme will no longer be available to new entrants. In practice, this means that if an employer intends to furlough a new employee, they will need to have placed them on furlough by 10 June at the latest so that the employee has completed the required initial three-week furloughed period by 30 June. As this cut-off date is fast approaching, it is essential that employers consider now if there are any additional staff they need to furlough.

There will also be a new maximum limit to the number of staff who can be included on a furlough claim in a claim period. This will be limited to the maximum number of staff an employer has claimed for under any previous (or current) claim up to the end of June. Therefore, employers will need to carefully consider their furlough plan, including considering which individuals can be placed on furlough this summer.

Employers are currently strictly prohibited from allowing individuals to work for them whilst they are furloughed. However, the JRS is being made more flexible to allow workers to work part-time from 1 July. For example, an employer could make the decision to furlough an employee for two days a week, and require the employee to work normal hours for the remaining three days. In this scenario, the employer would need to pay the employee the normal rate of pay for the three normal days they are actually working, but could rely on the JRS for the two days where the employee is furloughed.

As many of these key changes will have a financial impact for businesses, employers need to consider whether they need to revisit their practice of continuing to furlough employees. In particular, the requirement to bear some of the JRS’s costs from 1 August is likely to bring the prospect of redundancies into sharp relief for some employers. Others may need to consider contractual variations to existing employee furlough arrangements to accommodate the new part-time furlough flexibilities or more generally if looking to bring furloughed staff back to work on slightly different arrangements. Where this is the case, employers will need to be mindful of their obligations to collectively consult. In particular, a key “cliff-edge” date for conducting the minimum 45 days’ collective consultation prior to 1 August is 16 June 2020, although it’s worth bearing in mind that the collective consultation obligation can be triggered earlier if a proposal to dismiss arises earlier.

By Editor