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Job Retention Scheme - Phases two, three and beyond
by Hayley Bradfield

The Chancellor has recently announced the changes that will see the Job Retention Scheme (JRS) move into phase two, giving employers some further flexibility when bringing employees back to work.

Job Retention Scheme - Phase two

From 1 July 2020, employers will have the ability to bring employees back to work on a part-time basis. As employers, you will pay your employees for the days they work, with the Government paying the remainder at the continued rate of 80% (capped at £2,500, as before).

To access the flexible scheme, employees must be in the current scheme as at 30 June 2020. This means an employee must be entered into the current scheme BEFORE 10 JUNE 2020 (to allow for the three week qualification period before furlough may be ended or amended). Any employees who are entered into the Job Retention Scheme after 10 June 2020, will not be eligible and you cannot claim the costs through this scheme.

Job Retention Scheme - Phase three and beyond

Following the introduction of the flexible scheme, will be the phasing out of the Government support, as follows:

  • From 1 August 2020, employers will pay all employer national insurance and pension costs (including the furloughed days);
  • From 1 September 2020, in addition to the above, employers will also contribute 10% of salary, for the furloughed days (the Government will pay 70% for the furloughed days, capped at £2,187.50);
  • From 1 October 2020, in addition to the above, employers will also contribute 20% of salary, for the furlough days (the Government will pay 60% for the furlough days, capped at £1,875);
  • The scheme will close on 31 October 2020.

Worked example

An employer is looking to furlough person X, to take advantage of the flexible scheme (assume 40% of time will be worked). Person X earns a regular salary of £3,500 per month. The following will happen:

  • Person X must be furloughed before 10 June 2020, and not carry out any duties for the employer for 3 weeks;
  • On 1 July 2020, the employee will work for the employer on a flexible basis. The employee will be paid by the employer for the days worked, as above 40%, at their regular salary rate. The employee will then be paid the furlough amount (80% of salary, or in this instance at the cap of £2,500) for 60% of their time;
  • On 1 August 2020, the flexible working will continue, but the employer will pay the worked days in the usual manner and cover the employer national insurance and pension costs for the furloughed days. The JRS claim will be for the salary element (80% or capped amount) only. There is still no obligation to top the furlough days up to 100%;
  • On 1 September 2020, the flexible working will continue, but the employer will pay the worked days in the usual manner and cover the employer national insurance and pension costs for the furloughed days. The employer will also pay 10% of the salary costs. The JRS claim will be for 70% of salary element only. There is still no obligation to top the furloughed days up to 100%;
  • On 1 October 2020, the flexible working will continue, but the employer will pay the worked days in the usual manner and cover the employer national insurance and pension costs for the furloughed days. The employer will also pay 20% of the salary costs. The JRS claim will be for 60% of salary element only. There is still no obligation to top the furlough days up to 100%.

Whilst the scheme has been a welcomed measure by all, the rules are complex and require careful planning, especially as we move into phase two. If you require any further detail or would like to discuss the scheme further, please contact Hayley Bradfield at H.Bradfield@watts-gregory.co.uk or 07977 336940.