Major changes to the Coronavirus Job Retention Scheme will land over the next few months. And they could cause a big hike in your staff costs.
Here are the updates that you need to know about, plus advice on how to keep your overheads under control as the furlough scheme winds down.
10th of June: Your last chance to furlough staff
The furlough scheme will run until October 2020, but close to new entrants after the 30th of June 2020.
However, the last date you can put someone on furlough is much earlier—Wednesday the 10th of June 2020
That’s because your employee needs to have been on furlough for at least three weeks before you can claim funding for wages.
So, if you want to furlough new employees and benefit from government support until October, you need to act fast.
30th of June: Furlough scheme closes to new entrants
Remember, while this is the official closing date, you must have put someone on furlough on or before the 10th of June to claim your grants.
1st of July: Launch of ‘part-time furlough’
From this date, you can make use of ‘flexible furlough’.
This allows you to bring employees back part-time and still claim grants to cover part of their wages.
For example, you can choose to bring an employee who works five days a week back for two days a week. You’ll pay for these two days as normal and the scheme will continue to cover some of their wages for the other three working days.
It’s important to record your employees’ hours carefully when they’re on part time furlough, as you’ll need to report this accurately.
You’ll also need to keep this data secure for at least five years to meet government guidance. HMRC has the right to retrospectively audit your business and will expect to see this info.
1st of August: Employer contributions hit
From August, you need to pay National Insurance (NI) contributions and employer’s pension contributions on furloughed employee’s wages.
The government will still cover 80% of furloughed employees’ wage costs (minus your contributions), to a maximum of £2,500 per employee per month. You don’t have to top this up to 100% unless you want to.
1st of September: Contributions rise to 10%
From the start of September, you must contribute 10% towards the 80% of a furloughed employee’s wages (up to £2,500 per month), plus NI and pension contributions. The government will fund 70% of their wages up to £2,190 per month.
1st of October: Contributions rise to 20%
From the start of October, you need to contribute 20% towards the 80% of a furloughed employee’s wages (up to £2,500 per month), plus NI and pension contributions. The government will fund 60% of their wages up to £1,875 per month.
31st of October: Furlough scheme ends
Assuming no further extensions are announced, the Coronavirus Job Retention Scheme closes. Employers get no further funding for staff after this date.
Act now to keep staff costs under control
If you want to benefit from government support until October, then you must furlough staff by the 10th of June.
Remember, you can only furlough employees that:
- Are on PAYE.
- Were on your payroll on or before the 19th of March 2020.
- Had been notified to HMRC via an RTI submission on or before the 19th of March 2020.
You’ll need to collect the relevant info on the employee you want to furlough and submit this, along with their earnings, to the HMRC through an online portal.
It’s important to get your furlough process correct to unlock your funding. So, for fast advice on how to furlough staff quickly before the deadline, contact Peninsula.
We can also help you plan to keep staff costs under control as your business comes out of lockdown. That includes helping you amend staff contracts, change working hours or, in the worst case, reduce the size of your workforce. Click here to claim your advice today