Update on the Coronavirus Job Retention Scheme (CJRS or Furlough)

On Friday 29 May, the Chancellor provided a further update on the furlough scheme.  We already knew the scheme would be tapered between August to October and be closed completely from 31 October 2020.  We also knew there were plans to launch a flexible furlough scheme from 1 August. In addition, this will allow you to bring employees back part time whilst still being able to use the scheme.

This date was brought forward to 1 July 2020 to help support people back to work. In addition, you as the employer will decide the hours and shift patterns your employees will work on their return. Furthermore, this is so you can decide on the best approach for them. In addition, you will also will be responsible for paying their wages while in work.

From August 2020, the level of government grant provided through the job retention scheme will also be slowly tapered to reflect that people will be returning to work. In addition, for June and July, the government will also continue to pay 80% of people’s salaries. In the following months, businesses will be asked to contribute a modest share, but crucially individuals will continue to receive that 80% of salary covering the time they are unable to work.

The scheme updates mean that the following will apply for the period people are furloughed:

  • June and July: 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. Furthermore, employers are not required to pay anything.
  • August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and also pension contributions. For the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions. They will also pay 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs, pension contributions and also 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.

Flexible Furlough

From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time. In addition, this includes any shift pattern, while still being able to claim CJRS grant for their normal hours not worked. When claiming the CJRS grant for furloughed hours, employers will need to report and also claim for a minimum period of a week.

The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3-week period prior to 30 June.

This means that the final date by which an employer can furlough an employee for the first time will be 10 June. In addition, this in order for the current 3- week furlough period to be completed by 30 June. Furthermore, employers will have until 31 July to make any claims in respect of the period to 30 June.

Guidance on flexible furloughing and how employers should calculate claims will be published on 12 June. Find out more information on how the Coronavirus Job Retention Scheme is changing.

The HMRC Guidance states – From 1 July the scheme will only be available to employers that have previously used the scheme in respect of employees they have previously furloughed.

In addition, this means employees who are now back at work but were previously on the furlough schemes can be re-furloughed again.  Furthermore, The 10 June date applies to new entrants only.

Next Steps

If you haven’t furloughed employees you think you may need to in the future, you must do this by 10 June.

Furthermore, if you are looking to recall employees back from furlough flexibly, please speak to them. In addition, talk to them about how these new arrangements could work. For instance, is it 2 days per week or 5 shorter days?  You could also have employees with childcare issues over the upcoming holidays – does flexible furlough allow you to retain talent and skills whilst meeting business needs?

Remember, our Covid-19 Toolkit is also available for you and please speak to us should you have any questions or concerns – advice@thehrbooth.co.uk or 01383 668178.