Mind the gap with the second version of HMRC Furlough Scheme!
Lydik Grynfeltt, Published 3 June 2020 - LinkedIn
The extension of the HMRC Furlough Scheme until October 2020 hides important conditions to be aware of. Mind the date of the 10th June if you are thinking about adding employees to the scheme!
From the 1st July onwards, furlough will be restricted to employees whose employers have already made a Coronavirus Job Retention Scheme claim. This means that to add new employees to the scheme, employers have until the 10th June, as they must claim a minimum of three weeks per individual before the end of the current scheme, which is 30th June. After the 10th June, employers will not be able to register new employees to the scheme!
In July the scheme which is offered is a new one with more specific conditions and some shared cost with the employers using the scheme.
The novelty of the scheme is that employees will be able to part time work while being furloughed. That will allow employers to progressively reintroduce work in their offices and adjust their processes and policies in accordance with the guidance recently issued by the Government on working safely during Covid-19.
From July onwards, the individual periods of furlough can be of a minimum of one week instead of the original three weeks since March. This condition will add substantial flexibility and allow alternation between periods of work and furlough when required by the business or just for easing rotation between employees.
HMRC will cover the scheme at 80% of the wages as before up to £2,500 and will cover the employer NIC and pension contributions. In August, employers will have to pay the NIC and pension contributions on furloughed amounts.
In September, HMRC will pay 70% of wages up to £2,187.50, letting the employer pay the remaining 10% wages and all the NIC and pension contributions. In October, HMRC will pay 60% (up to £1,875.00) and the employer the 20% of the wages and the contributions.
This increase of cost of furlough for employers by the Government will add pressure to businesses leading to numerous redundancies when they are inevitable.
Some employers might be tempted to use the furlough scheme while kicking-off a consultation process for redundancies. As the consultation could reach up to 45 days for more than 100 potential redundant roles, the scheme is likely to be used to partly pay salaries during the period of consultation and the notice period for those made redundant.
HMRC will provide an update with technical details on 12th June on their website.
For the moment, you can find more details on:
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