Last reviewed 23 July 2020
For many employers in England, 1 August will be the start of a very important period of post-coronavirus economic recovery. Opeyemi Ogundeji, researcher and employment law writer at Croner-i, explores this in more detail below.
The Government’s plans to help the country survive through the necessary lockdown measures, implemented during the peak of the pandemic, will begin to unwind on 1 August. The date marks the start of some very important developments in employment law:
contributions to the Coronavirus Job Retention Scheme (furlough scheme) will begin
31 July is the last date that employers can make claims to the furlough scheme for the period ending 30 June
shielding will be paused in England from 1 August
employers will have more discretion over whether staff should continue to work from home across England from 1 August.
The furlough scheme
The Job Retention Scheme was put in place to support employers who were not able to operate as normal due to the pandemic. Since its inception, thousands of employers have furloughed all, or part, of their workforce and claimed 80% of wage costs, to a maximum of £2500 per employee per month, to pass on to employees. Based on information from the Experimental Official Statistics publication produced with HMRC’s furlough claims data, the scheme has supported 9.4 million employees thus far, with assistance totalling £26.5 billion.
Until now, employers have been able to claim the portion of the employee’s wages, together with employer National Insurance and pension contributions.
There are two developments on the furlough scheme occurring on 1 August. The first is that, even though the Scheme does not end until 30 October 2020, firms must begin to contribute to the wages of furloughed workers’ wages. The first phase of contributions, introduced from 1 August 2020, will see employers required to pay the employer’s National Insurance (NI) and pension contributions of furloughed workers’ wage costs in relation to the hours that the worker does not work. Employers must pay NI and pension contributions for all hours that furloughed employees are working under a flexible furlough arrangement from 1 July 2020. Further contributions from employers will be needed from September. The 80% grant paid by the Government will continue at a cap of £2500 until the end of August, after which the following will apply:
in September, the Government’s grant will decrease to cover 70% of furloughed employee wages at a decreased cap of £2187.50
in October, the Government will cover 60% of furloughed employee wages at a cap of £1875.
Employers will need to continue paying employers’ National Insurance contributions and pension contributions for not only August but September and October as well. Once government contributions begin to decrease, employers must also top this up to ensure that furloughed employees still receive 80% of their wages up to £2500. For example, a 70% grant up to £2187.50 will attract a 10% top up from employers to a maximum of £312.50.
The second important change occurs on 31 July. This is the deadline for employers to make claims to the Scheme for periods ending on 30 June. This means that employers will not be able to recover any money, from 1 August onwards, from the Scheme for periods relating to before the end of June. Employers must make sure a claim relating to pre-30 June is submitted by 31 July.
Shielding was introduced for clinically extremely vulnerable people as a measure to both protect them from the risk of serious illness if they contracted coronavirus and to relieve pressure on the NHS at the height of the pandemic. In England, Scotland and Northern Ireland shielding will be paused from 1 August which means that those who received letters instructing them to stay at home for 12 weeks will be allowed to return to the workplace. In preparation for this, employers should take the specific circumstances of a potentially anxious employee into consideration before returning them back to work and devise a return to work plan to tackle any issues that may arise.
Notably, the Government has stated that they are simply “pausing” shielding rather than bringing it to a permanent end. This means that the possibility of it being reinstated is likely, even on an individual basis, depending on how the next couple of months progress with the pandemic. Employers — in addition to making the workplace Covid-secure for all employees especially the most vulnerable — should therefore keep in mind that they need to draw up plans in preparation for a possible reinstatement of shielding rules at any time before or after 1 August.
In Wales, shielding will be paused on 16 August. This means that those who have been shielding may return to the workplace from 17 August.
From 1 August, employers in England will be granted more discretion to be able to ask staff to return to the workplace, ending any homeworking measures implemented as a result of lockdown. The Prime Minister stated that employers can decide where it is safe for staff to carry out their duties — either a continuation of homeworking or returning to a Covid secure workplace. Employees should be consulted on any return-to-work plans and should not be asked to return if it is not safe to do so.
Employers should keep in mind that, since 18 July, local authorities in England have been given powers to implement localised lockdown measures — this includes closing specific premises. The Government seem to be focused on potentially using local lockdown measures as a key component of working against a second wave of coronavirus. While employers have likely already considered the implications of a localised lockdown, it is important that they are ready to implement measures, such as homeworking, should their geographical area or business face an increased rate of infections.
Job Retention Bonus
On 31 July, more information on the Job Retention Bonus will be published. The Chancellor recently released brief details on the bonus: employers will be able to claim a £1000 cash bonus for each employee who is brought back from furlough and kept in employment between 1 November 2020 and 31 January 2021. In addition, the employee must receive at least £520 a month on average during this time period.