This article has been updated to reflect the latest Government guidance.
On 29 May, the Chancellor Rishi Sunak announced the Government’s plans for adjusting the Coronavirus Job Retention Scheme (CJRS) over the forthcoming months, with a view to the scheme coming to an end on 31 October 2020.
Details of the changes were first set out in the Government’s factsheet (which also covered changes to the Self-Employment Income Support Scheme). The CJRS will change incrementally from 1 July, but note that the latest date that employers could furlough staff for the first time (those individuals who have not previously been furloughed) was 10 June 2020. From 1 August employers will be required to contribute towards the cost of furloughed employees’ wages.
Revised (and new) guidance has now been published to reflect the changes to the scheme.
- From 1 July 2020, employers can start to furlough employees on a part time basis, while still claiming under the CJRS for those hours not worked.
- Employees can be brought back to work for any amount of time and on any work pattern, with the employer able to claim a grant under the CJRS for the hours not worked. Individuals can continue to be rotated on and off furlough and can continue to be furloughed full time as necessary.
- Employers must agree any new flexible furloughing arrangement with their employees and confirm it in writing, keeping a record of the agreement for five years. Employers must also keep records of the number of hours employees have worked and the hours they are furloughed, for six years.
- Where a previously furloughed employee starts a new period of furlough after 10 June but before 1 July, it must be for a minimum of three consecutive weeks (even if this period continues after 1 July).
- Details of how to calculate the amount of the grant claimed under the new flexible working arrangements are set out in the guidance for employers. The Government has also published a number of examples of how to carry out the calculation and has updated its CJRS calculator.
- From 1 July, claim periods will no longer be able to overlap calendar months, so claims must start and end within the same month. Each claim must be for a period of at least seven days, unless the claim includes a shorter period of days at the beginning or end of a month. Employers must claim in respect of the period to 30 June by 31 July.
Closure to new entrants
- The CJRS closes to new entrants from 30 June 2020. This means that only those who have already completed a full three-week period of furlough prior to 30 June will be eligible under the scheme. The final date by which an employer could furlough an employee for the first time was therefore 10 June 2020, in order for the three week period to be completed by 30 June.
- This requirement does not apply to parents returning from a period of maternity or other form of statutory parental leave after 10 June 2020, and who have not previously been furloughed. Employers will still be able to use the CJRS in respect of such employees, provided that they have furloughed other employees prior to 30 June.
- From 1 July, employers can only claim under the CJRS in respect of employees who have previously been furloughed, but these individuals can still be rotated on and off furlough.
- The maximum number of employees that employers can claim for at any one time after 1 July cannot exceed the maximum number they have already claimed for at any one time under the current scheme. So if the employer has previously submitted claims for 30, 20 and 50 employees between March and June, the maximum number of employees the employer can claim for in a single claim after 1 July would be 50.
- For June and July, payments under the scheme will continue up to a maximum of 80% pay (subject to the existing cap of £2,500 per month, and with any hours worked paid in full at the usual rate of pay).
- From August, employers will be responsible for paying employers’ National Insurance Contributions and pension contributions for their furloughed employees, provided the amount claimed is above the threshold for these payments. They can still claim 80% of normal pay up to the cap of £2,500 under the scheme.
- In September, the grant available under the scheme will reduce to 70% of wages, up to a cap of £2,187.50, for those hours the employee does not work. Employers will be required to pay NICs and pension contributions, plus 10% of wages, so that furloughed employees will still receive 80% of normal pay capped at £2,500.
- In October, the employer’s contribution raises to 20%, with the grant reducing to 60% subject to a cap of £1,875 per month. The CJRS is due to close on 31 October 2020.
- Note, the monthly cap will be proportionate to the hours not worked, so if an employee is working part time and is furloughed for the remainder of the week, the cap will reduce accordingly.
- If employers make an error in a claim that results in an overpayment, this must be repaid to HMRC. Employers will be asked whether they need to adjust the amount of a new claim to account for any previous error.
A summary of the changes to the employer contribution is set out below, based on an employee furloughed full time:
Please note, we are planning to host a webinar covering the changes to the CJRS on 18 June 2020. For further details and to book a place visit our events page.
This article is from the May 2020 issue of Employment and Immigration Law Update, our monthly newsletter for HR professionals. To download the latest issue, please visit the newsletter section of our website. For further information please contact Liz Stevens or another member of Birketts’ Employment Law Team.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at June 2020.