Chartered accountants Moore Thompson give advice to businesses with furloughed staff

Matthew Upex, of chartered accountants Moore Thompson, gives his advice to businesses with furloughed staff:

During the last few months, the Government has extended a helping hand to many businesses through the billions of pounds of financial support on offer.

One of the key measures is the Coronavirus Job Retention Scheme (CJRS), which has allowed businesses to furlough employees while covering up to 80 per cent of wages, up to a cap of £2,500 month.

Many businesses were delighted to learn that the scheme would be extended until October, but there are important changes to the rules that they need to be aware of in the coming weeks.

As part of the extension, the Government will allow flexible furloughing. This comes into effect from July 1, allowing employers to bring back furloughed part-time, while still being able to claim a grant in respect of the time not worked when they otherwise would.

Employers will, of course, have to pay employees at their usual rate of pay for any hours they work, while also covering the cost of Employer National Insurance Contributions (NICs) and minimum employer automatic enrolment pension contributions.

The Government will also begin to cut back the amount of financial support on offer in the following months.

From August, CJRS grants will cease to cover Employer NICs and pension contributions, with this cost passing to employers. However, the grant will still cover 80 per cent of furloughed employee’s usual wages.

From September, the grant value will fall to 70 per cent of a furloughed employee’s usual wages. Employers will be expected to contribute the remaining 10 per cent to meet the same 80 per cent commitment.

This grant will then reduce again during the final month of the grant in October to 60 per cent, with employers expected to contribute 20 per cent for those who remain on the scheme.

While these deadlines may seem far away, businesses need to be ready for a more urgent change this month that will see the scheme close to new entrants from June 30.

After this point, employers will only be able to furlough employees who have been furloughed for three full weeks at any point before June 30. This means the last day an employer can furlough an employee for the first time will be Wednesday, June 10.

After June 30, employers will not be able to claim for more employees in a claim period than the maximum number they have claimed for in any prior period under the scheme. In light of these changes, it is important employers prepare their business for the additional costs they may face.