Furlough Update: The End is Nigh

Furlough update: The End is Nigh

Rishi Sunak Member of Parliament gives a furlough updateFriday is often Rishi Sunak day at the Downing Street podium. On 29 May, the Chancellor announced that the furlough scheme, which has been effective from 1 March, will close on 31 October 2020 and will close to new entrants on 10 June. During the final three months of the scheme, employers will have to contribute to the cost of furloughed employees.

These are the important changes to the scheme that were announced:

• The scheme will continue unchanged until 30 June.• Employers will not be able to place employees on furlough after 10 June 2020. This is to allow employees the minimum three weeks’ furlough before the end of the month.

• ‘Flexible furlough’ will be introduced on 1 July. Employees will be able to work part-time and be furloughed part-time.

• From 1 August, employers will be responsible for employee’s national insurance contributions and pension contributions, which will no longer be reclaimable through the scheme.

• From 1 September, the Government’s contribution will be reduced to 70% of salary (up to a maximum of £2,190). Employers will be required to pay national insurance and pension contributions and at least 10% of salary to make up 80% of the total, up to the monthly cap of £2,500.

• From 1 October, the contribution will reduce to 60% of salary (up to a maximum of £1,875) and employers will pay national insurance and pension contributions and at least 20% of salary, up to 80% of salary, or £2,500 a month, if lower.

This note is based on Government announcements and guidance issued by HMRC. There is more detail in the official guidance and this summary cannot cover everything. I will be pleased to answer any specific questions if you email me at john@patronlaw.co.uk

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