Announcing the Flexible Furlough Scheme

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On Friday 29th May 2020, Rishi Sunak, the Chancellor of the Exchequer, announced plans under the Coronavirus Job Retention Scheme for the end of the current Furlough Leave scheme on 30th June 2020 and the introduction of the Flexible Furlough Scheme from 1st July 2020.

There is more detailed guidance expected in the next couple of weeks but the important highlights we all need to be aware of at this stage for business continuity and sustainability planning are:

  • 10 June 2020 will be the last day that employers can place employees on furlough
  • From 1 July, ‘flexible furlough’ is being introduced, meaning employees will be able to work part-time and be furloughed part-time.  Businesses will decide how that will work (in terms of the time split)
  • From 1 July. the flexible furlough scheme will only be available to employers that have previously used the scheme in respect of employees they have previously furloughed
  • From 1 August, employers will have to pay employee’s national insurance contributions and pension contributions, and can no longer reclaim them through the CJRS
  • From 1 September, the government will only reimburse 70% of salary (up to a maximum of £2,190). Employers are required to top-up to 80% (or more, depending on what the employer agreed with the employee)
  • From 1 October, the government will only reimburse 60% of salary (up to a maximum of £1,875), and employers will continue having to top up to 80% (or more)
  • The furlough scheme will close on 31 October 2020.

We anticipate this means some employers will now wish to act quickly to use the furlough scheme as they will otherwise be excluded from doing so. We also anticipate some employers will now be able to take pending decisions about making redundancies (or not).

For further advice and support on business continuity, sustainability planning, organisational development and restructuring / redundancies, please contact us.

The self-employed grant is being extended, with applications opening in August for a second and final grant.  There will be parity with the reducing furlough scheme, paying 70% (not 80%) of average earnings up to £6,750.