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Coronavirus Job Retention Scheme: Important Update from the Chancellor

The Government announced on Friday that the furlough scheme will end on 31 October 2020, with contributions required from employers increasing gradually over the coming months.  The key changes impacting employers are:

  • From 1 July 2020, employers will be able to take advantage of ‘flexible furlough’, where employees can work part-time while furloughed. 
  • Employers will need to place workers on furlough by 10 June 2020, in order to benefit from the new flexible approach to furlough. This deadline is three weeks before the end of the original furlough scheme.  As there is likely to be an urgent need for employers to consider how to make best use of flexible furlough, businesses must act urgently to ensure employees agree with their furlough and that a claim is made via the existing scheme. 

Employer contributions will increase in three stages:

  • From 1 August 2020, employers will be required to pay employee National Insurance contributions and pension contributions.  Currently, these costs can be reclaimed through the scheme. 
  • From 1 September 2020, the Government will only reimburse 70% of salary, as opposed to the current 80%. Employers are required to contribute the 10% salary ‘top up’ to 80% (or more, depending on what was agreed with the employee). 
  • From 1 October 2020, the Government will only reimburse 60% of salaries with employers having to top up their employees’ salary to 80% (or more, as per individual agreements). 

Now that it is clear how the Government will scale back and end furlough, businesses will be in a better position to plan for their workers’ return to work.

For many, however, considering what adjustments need to be made to fixed overheads to continue to weather the ongoing economic challenge presented by COVID-19 is now urgent. The ‘easing back’ of the furlough scheme means that many businesses will now have consider how their operations will need to be restructured. LexLeyton is offering a free consultation to any company which needs support with their business planning, and advice around the impacts arising on their workforce.

Please contact us at legal@lexleyton.co.uk or 020 3949 8230 for further information.

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