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COVID-19: Insights into flexible furloughing and the updated Job Retention Scheme

Insights into flexible furloughing and the updated Job

Caroline Laffey discusses the key changes to the Job Retention Scheme from 1st July and in the coming months.

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Caroline Laffey

Partner, Tax and People Services

KPMG in the UK

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“Employers will need to consider where the scheme will leave them in terms of net employment costs and resource requirements, as well as what this will mean to furlough arrangements and how much pay workers will receive.”

Reflecting on the latest Job Retention Scheme (JRS) update, Caroline Laffey discusses the fundamental changes that are impacting the scheme as of 1st July. 

The JRS will operate on its current basis until the end of June and will close to new entrants from 30th June 2020. Importantly, employees have to have been furloughed for at least 3 weeks before the new scheme begins in order to be eligble. This means employers wishing to claim against the new scheme will need to ensure they have furloughed employees by 10 June, at the latest. Further amendments to the scheme may likely result in some significant changes to the way employers apply for and proceed with furlough arrangements.

Flexible Furloughing

“It is important that you review the future working arrangements of furloughed, and non-furloughed, workers as you may want to take this opportunity to bring furloughed workers back in to work part time”

From 1st July, furloughed workers will be able to work on a part time basis – known as flexible furloughing.

As a part of this, employers will be responsible for paying worked hours at the full contractual rate of pay – however, they can claim for a contribution towards wage costs of furloughed workers when they aren’t working. The contribution will be based on the proportion of usual hours not worked. As of yet, guidance around ‘usual hours’ has not been released.

The Job Retention Scheme Timeline

The Job Retention Scheme Timeline

Click here to view a larger version of the image.

 

Key Recommendations

  • Pending further detail, we recommend that, as far as possible, you model your employment costs by reference to your resource requirements, segmenting the population into those workers who will and won’t be expected to work from 1st of July
  • In early preparations, consider what the ‘usual working hours’ would look like for employees you intend to flexibly furlough 
  • As ever, continue to document all decisions; draft legislation is under consultation that will allow HMRC to charge penalties where it is found that the claimant deliberately submits an incorrect claim or doesn’t use the claim for its intended purposes

Updates to the Job Retention Scheme (JRS), dealing with a returning workforce and preparing for Brexit – these are just some of the next phases of challenges employers are facing in their new reality. Register for our webinar on 4th June to join our panel of experts across the People Services and Legal team. The hour-long webinar will deep dive into the latest Government updates and explore the practical implications you need to think through now and in the future. 

 

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KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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