Extension of the Coronavirus Job Retention Scheme and Flexible Furloughing
It has been announced that the Coronavirus Job Retention Scheme (CJRS) will close at the end of October, with a new flexible furloughing option from 1 July. Part-time working will only be available for those employees already in the full-time furlough scheme. The Chancellor, Rishi Sunak, said that the “new, more flexible furlough” means “employers will have the maximum possible flexibility to decide on the right arrangements for them and their furloughed staff”.
Over the upcoming months, the CJRS will work like this:
June
· During June, the CJRS will continue as it has since March, with the government continuing to pay 80 per cent of furloughed workers’ wages, up to a maximum of £2,500.
· The CJRS will close to new entrants from 30 June. From 30 June onwards, employers will only be able to furlough employees that they have furloughed for a full three-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, so that the current three-week furlough period can be completed by 30 June.
· Further guidance on flexible furloughing will be published on 12 June.
July
· In July, the government will continue to pay 80% of wages up to a maximum of £2,500 as well as employer national insurance (ER NICs) and pension contributions.
· From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked. Employers could, for example, require employees to work two days per week (paid for by the employer), while the furlough scheme pays for the other three days. Employers should pay “normal salary” for any hours worked by employees.
· Employers must agree with their employee any new flexible furloughing arrangement and confirm that agreement in writing.
· From 1 July, claim periods will no longer be able to overlap months in order to reflect the upcoming changes to the CJRS.
August
From August 2020 onwards, the level of the CJRS grant will be slowly tapered.
· In August, the government will pay 80% of wages up to a cap of £2,500 and employers will pay employer national insurance contributions and pension contributions.
· For the average claim, it is estimated that this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
September
· From September, the government will pay 70% of wages up to a maximum of £2,187.50 for the hours the furloughed employee does not work.
· Employers will pay employer national insurance contributions and pension contributions and 10% of employees’ wages to make up 80% total, up to a cap of £2,500.
· For the average claim, it is estimated that this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
October
· From October, the government will pay 60% of wages up to a maximum of £1,875 for the hours the furloughed employee does not work.
· Employers will pay employer national insurance contributions and pension contributions and 20% of employees’ wages to make up 80% total, up to a cap of £2,500.
· The CJRS will close at the end of October.