The end of July and start of August, has seen some important changes to the Coronavirus Job Retention Scheme which has seen many employees being furloughed.

These changes are:

1. Government has introduced changes to legislation effective from 31 July 2020 to ensure furloughed employees receive statutory redundancy pay and statutory notice pay based on their normal wages, rather than a reduced furlough rate: Furloughed employees receive full redundancy payments.

This would mean for example if an employee is on furlough and given 4 weeks’ notice at the start of August and remain on furlough for the duration of the notice period, the pay that they receive during the notice period should be based on their normal (pre-furlough rate) rather than the reduced furlough rate. Whilst the employer should be able to recover the 80% contribution under the furlough scheme, the employer would be responsible for topping up the additional 20% pay so that the employee is being paid at the pre-furlough rate for their notice period.

2. The Government has published more details of the Job Retention Bonus which is a one-off payment to employers of £1,000 for every employee who their employer previously claimed for under the scheme, and who remain continuously employed through to 31 January 2021. Eligible employees must earn at least £520 a month on average between the 1 November 2020 and 31 January 2021: Job retention bonus.

Whilst it is debatable as to whether this will be enough for some employers to put a hold on redundancies when compared with the cost to employers of employing employees until the end of January 2021, it does mean that if you have put employees on furlough and they have returned to work or are due to return, the bonus should be of interest.

3. The cost of the scheme for employers has increased. As from 1 August employers will be required to contribute employer national insurance and pension contributions which were previously covered under the scheme. These costs will increase further in September with employers required to contribute 10% of wages and the Government will contribute 70%. In October, the last month of the furlough scheme, the employer contribution increases to 20% and the Government will contribute 60%.

If you have any queries on the changes or any other aspect of the furlough scheme, please contact Matt Jenkin.