Employee Furlough Job Retention Scheme Updated Details

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July 13th 2020
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Employee Furlough Job Retention Scheme Updated Details

Chancellor announces changes to furlough scheme for PAYE employees, with a reduction in government support from August and a new flexible furlough scheme from July.

The chancellor has announced the details of how the furlough scheme will be slowly phased out. In addition he announced the end of the current scheme to new entrants on June 30th and the start of a new 'flexible furlough' beginning July 1st.

Firstly, the existing furlough scheme is to remain available for current applicants until October, however the support from the government will be tapered down.

Until the end of July there will be no changes from the current scheme.

From August, employers making a furlough claim will only receive the 80 percent of employee gross income (up to a £2,500 cap). They will not however receive coverage for employers NIC and auto-enrolment - which was normally paid on top of the employee's salary coverage. This mean employers will have to pay this amount out of pocket.

From September, the amount of furlough support will be reduced to 70 percent (up to a cap of £2,187.50) with no coverage for Employer NICS/Pensions. Employers are expected to pay the 10 percent minimum difference to make up to 80 percent coverage.

In the final month of October the amount of furlough support will drop to 60 percent (up to a cap of £1,875), with no coverage for Employer NICS and auto-enroled pensions. Employers are expected to pay the 20 percent minimum difference to make up to 80 percent coverage.

We have a furlough scheme calculator to help you calculate furlough amounts for any period from March to October 31st. This has been updated to reflect the Chancellor's announcement and will now also show the amounts employers will need to contribute due to changes coming in from August.

The Chancellor also announced a 'Flexible Furlough' scheme to launch on July 1st. This scheme allows businesses to allow employees to work on a pro-rata basis and the government covers the remainder of their regular wage under the job retention scheme. For example, an employee is allowed to work 2 out of 5 days a week. The employee is paid for the two days by the employer and the government pays the remaining 3 days of income under the CJRS scheme. More details have not yet been announced for this new flexible furlough scheme but will be on June 12th.

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