On 29 May 2020, the Chancellor gave further details about significant changes to the Coronavirus Job Retention scheme (CJRS) – more commonly known as the ‘furlough scheme’:
- The scheme will close to new entrants on 30 June 2020. This means that the last day to furlough an employee not previously furloughed is 10 June 2020.
- ‘Flexible furloughing’ will be allowed from 1 July with Government help available towards the non-worked hours.
- From 1 August, employers will contribute to the cost of the scheme.
The CJRS will close to new entrants on 30 June 2020
Claims for periods after 1 July will only be possible for employers who have previously used the scheme. So unless they have previously submitted a claim in respect to a period prior to 1 July, they will not be able to use the scheme at all.
The Government have introduced a deadline of 31 July for claims under the CJRS for the period from the beginning of the scheme up to 30 June.
New claims after 1 July will only be possible for employees who have previously been furloughed. As the shortest qualifying furlough period is 3 weeks, the last day for an employee who has not previously been furloughed to be furloughed and qualify under the scheme is 10 June 2020. If they are not furloughed by that date, their employer will not be able to make a claim under the furlough scheme for them.
Flexible furloughing will be allowed from July 2020
From the very beginning of the furlough scheme, the concept of furlough was very black and white; employees were either on furlough and not working at all, or they were not on furlough. This was true even if their workload was significantly decreased and they were only working part-time as a result. This is a huge concern for businesses starting to bring employees back to work but unable to provide them with full time work.
The Chancellor has addressed this by amending the scheme to allow part-time or ‘flexible furloughing’. Helpfully, they have decided to introduce the change earlier than initially planned and so it will be possible from 1 July 2020.
Flexible furloughing is only available to employers who have previously used the scheme, and only for employees who have previously been furloughed under the old rules of the scheme. So, if you intend to use the scheme for those that are not currently on furlough to balance your staffing needs, you need to act fast to meet the 10 June deadline!
Further guidance and rules on flexible furloughing are expected on 12 June. These are expected to set out how to calculate 80% of the non-worked hours and clarify how this should be done for employees with no set working pattern. The employer will have to report the normal working hours and the hours that have actually been worked – the scheme will then reimburse 80% of the wages for the non-worked hours. The flexible working pattern will have to be agreed between the employer and the employee and be put in writing.
From August, the Government’s support will be slowly decreased and employers will be asked to contribute
Whilst the Government’s support will decrease, the employee will continue to receive at least 80% of their normal earnings under the scheme. However, from 1 August the amount that the Government contributes to the scheme will be reducing with the difference being made up by the employer.
From 1 August, employers will be expected to pick up the pension and Employer’s national insurance contributions. Currently both of these elements can be claimed for under the scheme. It is perhaps worth noting that the Government has reported a significant proportion of the claims made by employers do not include a claim for pension payments or employers national insurance contributions, probably because of the scale of the wages paid to employees that have been furloughed under the scheme, and so this change may have little or no impact on businesses.
From September the scheme will be altered further:
- From 1 September, the Government will contribute 70% of the gross salary under the scheme with the employers contributing 10% to bring the total to 80%. Employers can of course continue to ‘top up’ if they choose to do so.
- From 1 October the Government will contribute 60% of the gross salary under the scheme with the employers contributing 20%.
Whilst the changes are understandable given the sizeable cost to the taxpayer of funding the scheme, some businesses have warned that reducing the help will result in redundancies or worse, the closing of those businesses altogether, especially in sectors that may be slower in returning to normal business levels.
If you have any changes regarding the CJRS changes, please get in touch with a member of our HR Consultancy team.
Coronavirus Job Retention Scheme Updates Timeline
The scheme closes to new entrants on 30 June. The Government will pay 80% of wages up to a cap of £2,500, as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.june 2020
From 1 July the scheme will be restricted to employers who have previously used it, and to employees who have previously been furloughed – to satisfy the minimum 3 weeks’ furlough period, the last day to furlough someone is therefore the 10 June. Flexible furlough is allowed, and employers will still be eligible for reimbursement of 80% of wages of furloughed workers, the corresponding employer’s NI contributions and pension contributions.july 2020
The Government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions.august 2020
The Government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.september 2020
The scheme will close at the end of October 2020. The Government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.october 2020
The Government will introduce a new CJRS bonus to reward and incentivise employers who continue to employ their furloughed employees through to 31 January 2021. The bonus will be a one-off payment of £1,000 per employee.january 2020