Greater flexibility built into Job Retention Scheme

Chancellor Rishi Sunak announced on Friday 29 May, changes to the Job Retention Scheme (commonly known as the Furlough Scheme).

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Propertymark pushed the Government, for greater flexibility in the furlough scheme, and is pleased to see that this flexibility has been introduced. This will help agencies to bring back more employees while they establish business needs.

So far, the scheme has helped 1 million employers across the UK furlough 8.4 million jobs, and this will continue through June and July in its current form with the Government paying 80 per cent of wages up to £2,500 per month – with no employer contribution.

The scheme will close to new entrants from 30 June 2020. The final date by which an employer can furlough an employee for the first time will be 10 June 2020.

Flexible furlough from 1 July

Employers will have more freedom to bring employees back part-time under a new ‘flexible furlough’ scheme. This is a month earlier than previously announced to help support people back to work. Employers must pay wages for the hours their employees work and may still claim under the scheme for hours not worked. Arrangement for flexible furlough must be agreed with employees.

Employers begin to pay in August

The Government will continue to pay 80 per cent wages up to a cap of £2,500. However, from August employers will be asked to pay National Insurance and pension contributions.

Reduction in Government contribution

From September, the Government is asking employers to start contributing and will pay 70 per cent of wages up to a cap of £2,187.50 for any hours the employee is furloughed. Employers will then pay 10 per cent of wages to make up the amount to 80 per cent up to a cap of £2,500. For the average claim, this represents 14 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed.

In October, the Government will reduce their contribution to 60 per cent, with employers paying 20 per cent.

Support for the self-employed

The Self-Employment Income Scheme will be extended, with applications opening in August for a second and final grant covering three months’ worth of average monthly trading profits up to 70 per cent or a maximum total of £6,570.

The first grant was worth 80 per cent of the individual’s average monthly trading profits up to a maximum of £7,500. Applications for the first grant close on 13 July 2020.

The Chancellor advised there will be no further extensions or amendments to these schemes.

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