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Covid-19: Flexible furlough timeline and impact on retail sector
The Coronavirus Job Retention Scheme (Furlough Scheme) will become more flexible once the initial phase ends on 30 June and we move into the second phase running from 1 July 2020 until 31 October 2020.
What is the Timeline for the Flexible Scheme?
From 10 June the furlough scheme is effectively closed for employees who have not been previously furloughed (to enable the three-week minimum furlough period to have been completed before the cut-off date of 30 June 2020). Until 30 June employers can claim 80% of furloughed employees’ salary, up to £2,500, but the employee must not do any work for the employer. Employer National Insurance Contributions (NIC) and some pension contributions can also be claimed. Employers are not required to contribute anything towards furloughed employees’ salaries but can top-up if they wish.
From 1 July the new flexible scheme starts and applies only to previously furloughed employees. Furloughed workers can now work part-time, and employers can still claim the grant for employees’ normal hours not worked. There is no limitation on the amount of time a furloughed employee can work or on the furloughed employees’ shift patterns. Employers can still claim for 80% of the furloughed employees’ salary, up to £2,500 as well as employer NIC and pension contributions for the hours the furloughed employee does not work. Employers must pay furloughed employees for the hours they do work.
From 1 August, employers will have to pay employer’s NIC and pension contributions and can no longer claim a grant for these. Until 31 August, the government will continue to pay 80% of furloughed employees wages up to a cap of £2,500 for hours not worked. Employers must pay employees for the hours they do work. Employers are required to fund the employers’ NIC and pension contributions for both the hours worked and hours not worked.
From 1 to 30 September the government will pay 70% of furloughed employees’ wages up to a cap of £2,187.50 for hours not worked. Employers will pay the balancing 10% of wages to make up the 80% total up to a cap of £2,500 per furloughed employee. Employers will also pay the full employers’ NIC and pension contributions.
From 1 October until the end of the scheme on 31 October the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work. Employers will pay 20% of wages to make up the 80% total up to a cap of £2,500 plus employers’ full NIC and pension contributions. The Furlough Scheme will, unless it is extended, end on 31 October 2020.
What does this mean for retail businesses opening from 15 June?
If you have a non-essential retail business in England and are considering re-opening from 15 June in accordance with the government’s easing of lock-down, any furloughed employees you have will need to remain fully at home until 1 July in order to remain within the furlough scheme. If a furloughed employee comes back to work between 15 June and 1 July it will not be possible for them to participate in the furlough scheme again. You may, therefore, want to consider only using staff who have not been on furlough to operate the business prior to 1 July so as to maintain the option of bringing furloughed staff back gradually on a part-time basis whilst still participating in the Furlough Scheme.
Disclaimer: Nothing in the Legal Insights section and this blog is intended to provide legal or other professional advice and, if readers are interested, they should consider taking separate legal or other professional advice accordingly.
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