September 1st 2020

The Government’s furloughed workers scheme sees major changes over the next few months, starting on September 1st 2020. Make sure you keep up to date with these important changes in employment law.

Let’s take a recap on the scheme so far and then go into the changes.

Furlough Recap

Government initiates Job Retention Scheme in response to possible mass redundancies caused by coronavirus lock down. The UK Government paid 80% of worker’s salaries up to a maximum of £2,500 a month and the National Insurance and Pension contribution. This first phase lasted until the end of June.

Flexible furloughing started whereby staff can come back to work part-time.

Employers required to pay the National Insurance and Pension Contributions for staff still on furlough.

Government cuts grants further. Employers now need to contribute towards furloughed workers’ wages. Even more so by October.

So What Are The Specific Rules The Government Has Introduced?

September 1st 2020 > The Government now only pay 70% of your furloughed staff salaries up to a maximum of £2,187 per month. As the employer you need to top up this salary by 10% so that staff get 80% of normal pay. (Up to £2,500) 

Employers must pay National Insurance and Pension Contributions too for the hours the employees are on furlough.

Further changes happen in October.

October 1st 2020 > The UK Government reduces the Job Retention Scheme payment to 60% of the monthly salary which is £1,875 maximum. Employers have to top salaries up to 80% of normal pay (so the top up is 20%) and also  pay employer National Insurance and pension contributions.

November 1st 2020 > Job Retention Scheme stops. All staff will have to be paid their salaries by the employer. All pensions and National Insurance will have to be paid by the employer. 

This is a crunch period for companies and it pays to think about this now, rather than leave it to the last minute.

But before you decide on redundancies, there is a small helping hand from the Government. 

The Job Retention Bonus.

The Government knows that there are likely to be millions of people at risk of being made unemployed. To try and support companies they are offering a £1,000 cash payment to retain furloughed staff. 

Like all Government schemes there are strings attached, and the details of how the payments will be made have not been published. However, bear these conditions in mind if you want to activate this Job Retention Bonus:

> Staff will have to be in continuous employment until the end of January 2021.

> This period of November 2020 to January 2021 cannot be a notice or redundancy period.

> Staff must earn a minimum of £520 per month from November 2020

> Real Time Information (RTI) records for staff must be available until the end of January.

So What Should Employers Do?

Business owners may be planning redundancies now, or working on a wait and see basis. It is very difficult for some business owners to know what the situation is going to be like in a couple of months. 

However, there are strict laws when it comes to making people redundant or changing their contracts, e.g. to offer staff part-time hours instead of full-time.

Talk to an employment solicitor who can help with your options.

Being prepared and having a range of options that are legal and acceptable to staff going forward, is the responsible thing to do.

A good employment solicitor will help human resource managers, and business owners get the right processes in place to ensure there are no legal mistakes being made. 

They can also help make the redundancy planning process simpler and advise on contractual issues.

In many cases, Barrett and Co Solicitors can help the management team through a process of business contraction and contractual obligations, leaving the company in a better position to get back on its feet and ultimately expand again once business conditions improve.

Speak to Justin Sadler, Employment and Contract Solicitor at Barrett and Co Solicitors LLP Reading, on 0118 958 9711 or email [email protected]

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