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Tapering the Furlough Scheme – What Support is Available for Employers?


The Coronavirus Job Retention Scheme (CJRS) allows employers to furlough employees and receive a grant that covers 80 per cent of employees’ salary costs.  What happens when the support starts to taper off?

From 31 July 2020, the government’s financial support with the CJRS will begin to taper in the following stages:

From 1 August 2020, employers must begin to pay their employees’ National Insurance and pension contributions.  These cannot be reclaimed:

  • From 1 September 2020, the government will reduce its support under the CJRS to cover 70 per cent of employees’ wages, with employers expected to top up the outstanding ten per cent (or more, if agreed).
  • From 1 October 2020, the government will further reduce its CJRS support to 60 per cent salary coverage, with employers expected to top up the other 20 per cent (or more, if agreed).
  • The CJRS ends on 31 October 2020.

Since 1 July 2020, the Government has Enabled Employers to Operate a "Flexible Furlough" Scheme.  What is it?

Under the scheme, employers may bring their employees back to work on a part-time basis, paying 100 per cent of their wages on the day(s) they work. On the days when their employees are not working, employers are still eligible for furlough support under the CJRS, on a pro-rata basis.

This option enables employers and employees alike to incrementally return to a normal pattern.  Furloughed employees get to transition back to their working routine and employers are able to pay a greater proportion of their staff’s wages according to their cashflow.

What are the Pros and Cons of Flexible Furlough?

Intelligent use of the flexible furlough scheme may enable employers to drip-feed employees back into the workplace to assist with the implementation of "COVID-secure: measures and prepare for a full return of their workforce.

Different employees can be selected for flexible furlough from week-to-week, ensuring fairness.

A downside of the scheme is that claiming eligibility can be complicated, with employers required to track their employees’ working hours meticulously.  

For example: If an employer claimed for ten days’ furlough support for an employee but circumstances changed, the employee worked more hours and only eight days’ support was required – the employer would need to be diligent and make the necessary adjustments to their calculations to avoid making a fraudulent claim.

What Financial Help is Available When the CJRS Concludes in October?

  • Job Retention Bonus – Announced on 8 July 2020, the government will pay a bonus of £1,000 per employee to employers who have brought back furloughed employees continuously between November 2020 and January 2021 (employees must have earned an average of £520 per month during this period).
  • Bounce Back Loan Scheme – Introduced in May 2020, this is available to SMEs and enables employers to claim for a loan of up to 25 per cent of their turnover, up to £50,000.  The deadline for Bounce Back Loan applications is 4 November 2020.
  • Coronavirus Business Interruption Loan Scheme – This loan is offered on generous terms to SMEs suffering with cashflow problems due to the impact of Covid-19.  To qualify, the SME’s turnover must not exceed £45 million.  The government guarantees up to 80% of loan amounts, with any interest and fee payments to be paid by the government for the first 12 months.
  • Coronavirus Large Business Interruption Scheme – As above, but these are loans of up to £200 million offered to businesses with a turnover exceeding £45 million.

Full terms and conditions for the loans can be found on the website.

What options other than redundancy do employers have if it’s not possible to bring employees back on full pay after 31 October 2020?

“Redundancy is often the first or only option considered, but it should only ever be a last resort and there are a number of other options to consider first.  It’s important to note that most of these will involve varying the employee’s terms and conditions which necessitates consulting with them and obtaining their agreement.”

–Angela Barratt 

Senior HR Consultant, HeadsTogether                         

Angela Barratt, Senior HR Consultant at HeadsTogether, discussed this topic with ThisWeekinFM.  She mentioned the following options that employers – if they’re interested in implementing any of these - should take appropriate advice on, relative to their individual circumstances: 

  • A reduction in hours. This could include a job-share arrangement.
  • A reduction in salary across the workforce to buffer redundancies.
  • A reduction in non-staff overheads. “Savings in overheads may be possible through moving staff to home or remote working,” Angela says.
  • Redeployment of staff from badly-performing areas of the business to better-performing ones.
  • A short term lay-off. “There may be provisions in an employee’s contract for this.  If not, it would have to be consulted and agreed,” Angela says.
  • Unpaid leave/sabbatical with the employee’s agreement.

Picture: A photograph showing two people in discussion whilst sitting at a desk.

Article written by Cain Smith.