July 10, 2020

UK government updates Job Retention Scheme

The UK government recently revealed new rules for the Coronavirus Job Retention Scheme that will go into effect 1 July 2020. Here, an overview of the main changes.

On 29 May 2020, Chancellor Rishi Sunak revealed new rules for the Coronavirus Job Retention Scheme that went into effect on 1 July 2020. Some of the substantive changes are noted below. Employers are encouraged to review the changes in detail, which may be found here, here, and here.

Under the new rules, the government subsidy will be tapered down each month throughout the duration of the scheme as follows:

Month

Subsidy Amount

July

80 percent of an employee’s wages up to £2,500 per month with the government covering employer NICs and pension contributions

August

80 percent of an employee’s wages up to £2,500 per month with the employer paying employer NICs and pension contributions

September

70 percent of an employee’s wages up to £2,187.50 month with the employer paying employer NICs and pension contributions

October

60 percent of an employee’s wages up to £1,875 per month with the employer paying employer NICs and pension contributions

 

Flexible furlough arrangements

The new rules allow for a flexible furlough arrangement, under which an employee may work a reduced number of hours respective to their normal working hours. The employer’s claim is then based on the difference between the employee’s actual hours worked and their normal hours. Flexible furlough arrangements are only available if the employee’s furlough date starts on or after 1 July and the employee was previously completed a period of furlough prior to 1 July.

An employer and employee must agree in writing to a flexible furlough arrangement, and employers must maintain certain records about this. The existing requirement that an employee needs to be on furlough for a minimum of three consecutive weeks does not apply to flexible furlough arrangements. However, because there is a requirement that only employees who were furloughed prior to 1 July may be placed on a flexible furlough arrangement, such employees must have been furloughed for at least three consecutive weeks prior to 1 July.

Calculating and submitting claims

The government updated its guidance for calculating claim amounts to account for flexible furlough arrangements, which may be found here. For employees covered under flexible arrangements, one of the decisions employers will need to make is determining the employee’s usual hours, which will depend on whether they work fixed or variable hours. Employers will need to follow the applicable guidance to determine the usual hours for each pay period, or part of a period, that falls within a claim period for each covered employee.

Employers will also be subject to certain limitations when making claims from 1 July 2020. Only employees who have been claimed under the scheme sometime between 1 March 2020 and 30 June 2020 will be eligible for additional grants after 1 July 2020; however, employers have until 31 July 2020 to make claims for periods through 30 June 2020.

In addition, the number of employees that may be claimed in any single claim period from 1 July 2020 cannot exceed the maximum number of employees claimed for any claim period through 30 June 2020. This means that employers should look at how many employees had been placed on furlough on or before 10 June 2020. If an employee was placed on furlough after 10 June 2020, the requirement that employees are furloughed for at least three consecutive weeks prior to 1 July 2020 would not be satisfied.

Finally, employers should ensure that they are adhering to new rules when submitting claims from 1 July 2020. For example, claim start and end dates cannot overlap nor should a claim period span more than one month. For employers who had been aligning claim periods with pay period dates, additional work may be needed to ensure that claims are appropriately segregated by month. 

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Disclaimer: The information provided in this post is provided for informational purposes only and should not be relied upon or construed as legal advice and does not create an attorney-client relationship. You should review with your legal advisors how the laws identified in this post may apply to your specific situation.

Adam Wysopal

Adam Wysopal is Compliance Counsel at Ceridian with years of experience advising organizations on regulatory obligations and internal compliance programs. Adam is passionate about technology, innovation, and collaboration. In his current role, Adam enjoys being able to support development teams in their continuous effort to ensure Ceridian’s HCM solutions keep up with evolving employment-related compliance needs.

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