Friday, 3rd July 2020
The 4th July is an important date for those celebrating Independence Day, it also marks the day that lockdown restrictions are lifted for more businesses across England. This also means that furloughed employees can return to work and employers can continue to benefit from the assistance of the Job Retention Furlough Scheme.
However, the month of July also sees the introduction of new rules
- Furloughed employees can work part-time
- Employers must contribute to wage costs
- Scheme is closed to new applicants
- Scheme will be gradually tapered
Let’s focus on how this affects the July payroll first, as the rules change again in August!
As mentioned in our previous article, click HERE to read more, the government will continue to pay 80% of the furlough wages for the hours not worked. However, the employer must pay for the hours that are worked. This is the flexible bit that enables employees to come back to work on a part-time basis.
The same applies to Employers NI and Employers pension contributions. These must be apportioned between the furloughed hours and the hours actually worked.
The wage cap remains at £2,500 per month and is prorated accordingly for the hours worked during a furloughed pay period.
Working Part-time – How does this work?
This only applies from 1st July and is part of the new flexible furlough rules.
In order to benefit from this, employers must calculate the following, for each employee:
- Usual hours worked, under normal contract (A)
- Actual hours worked (B)
- Furloughed hours worked – the difference between A and B
Usual hours can be based on a normal salaried month, or for anyone on varied or zero-hour contracts it involves looking at an average of hours worked during the 2019/20 tax year.
Not sure how to calculate the hours, then give us a call!
When can you make a claim?
Only employers currently registered on the scheme can make a claim. Unfortunately, anyone wanting to apply are too late and will not be eligible for this scheme. If this applies to you then contact us to find out what other help may be available to you.
All claims must be made for the month of claim, as in you cannot straddle a month. Claims for the period up to 30th June must be made first before you can make a claim for July. The same will apply for August and so on, due to the changing rules.
If your pay period straddles the months, then you must make 2 separate claims.
Are all employees eligible?
No! Only employees who had been furloughed between 1st March and 30th June can be considered for the new scheme, even if they returned to work at some point during this period.
An employee’s furlough period can straddle June and July however the employer must make 2 separate claims. In which case these employees must still be furloughed for 21 consecutive days to qualify for the claim on both the old and new scheme.
Not sure if your employees will qualify due to your pay periods then give us a call. Our dedicated Payroll team are here to help.
What is in store for August?
The main change to the rules is that Employers NI and Pension contributions will no longer be covered by the furlough claim scheme. All these costs must be paid by the employer regardless if the employee worked part-time or was completely furloughed.
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