Changes to the Coronavirus Job Retention Scheme

Our summary of the extension and changes to the Coronavirus Job Retention Scheme

On 29 May 2020, Chancellor Rishi Sunak provided further details on the extension and changes to the Coronavirus Job Retention Scheme.

Coronavirus Job Retention Scheme (CJRS)

The Chancellor previously announced that the CJRS would be extended until the end of October 2020, with further flexibility for employees to work part-time from August 2020 although employers would need to start contributing to the salaries of furloughed staff.  The extension and changes to the scheme have now been clarified as follows:

Extension of the CJRS

The CJRS will be extended until the end of October 2020.  However, the scheme will be closed to new entrants from 30 June 2020.

In practice, this means that, for an employee to be furloughed under the scheme after 30 June 2020, they must have already been furloughed for a full three week period prior to 30 June 2020.

Therefore, the last date that an employee can be placed on furlough for the first time is 10 June 2020 to allow time for the three week furlough period to be completed by 30 June 2020.  Employers will have until 31 July 2020 to make a furlough claim for the period up to 30 June 2020.

Increased flexibility

From 1 July 2020, a month earlier than previously indicated, employers will be able to agree with their employees that they can return to work part-time as required.  There will be no minimum amount of time that an employee must be furloughed to participate in the CJRS.

Employers will be responsible for paying the full wages, and related employment costs, of employees for the percentage of their normal hours that they work.

Subject to the below tapering-off of the scheme, the government will continue to pay 80% of employees’ normal wages (capped at £2,500 per month) for the proportion of the time those employees are still on furlough.

Any part-time working arrangement agreed between an employer and employee must be for at least a week and agreed in writing.  Furlough claims must also cover a minimum period of a week but can be for longer periods such as two weekly or monthly.

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Tapering-off of the CJRS

The CJRS will be tapered-off between August and October, with employers beginning to meet the costs of furloughed staff.

Therefore, between the government and employers, furloughed employees will continue to receive 80% of their normal wages (capped at £2,500 per month) until the end of October for the proportion of their standard hours that they are furloughed.

The CJRS will be tapered-off as follows:

  • June and July: the government will continue to pay 80% of furloughed employees normal wages (up to a cap of £2,500 per month), plus employers’ NIC and minimum auto-enrolment pension contributions, for the percentage of an employee’s standard hours that they are on furlough.
    Therefore, if an employee returns to work part-time in July at 25% of their normal hours (prior to coronavirus), the government will pay 80% x 75% of their normal wages (capped at £2,500 x 75% = £1,875 per month).
  • August: the CJRS will continue to operate as for July except that employers will now be required to meet the cost of employers’ NIC and minimum auto-enrolment pension contributions.
  • September: the government will pay 70% of a furloughed employee’s normal wages (up to a cap of £2,187.50 per month). The employer will therefore be required to meet the remaining 10%, to ensure the furloughed employee receives at least 80% or their normal wages (up to the overall cap of £2,500 per month), and the employers’ NIC and minimum auto-enrolment pension contributions.
  • October: the government will pay 60% of a furloughed employee’s normal wages (up to a cap of £1,875 per month). The employer will therefore be required to meet the remaining 20%, to ensure the furloughed employee receives at least 80% or their normal wages (up to the overall cap of £2,500 per month), and the employers’ NIC and minimum auto-enrolment pension contributions.
  • As mentioned above, the amount of furlough pay and the caps are proportional to the hours not worked by an employee (i.e. when they are on furlough).

The government has been keen to point out that, for many businesses, the employers’ NIC and minimum auto-enrolment pension contributions will represent just some 5% of the total employment costs of an employee and that, in many cases, the employee will fall below the threshold where employers’ NIC and minimum auto-enrolment pension contributions need to be paid or that the employers’ NIC contributions will be covered in full or in part by the Employment Allowance.

For more information

For more information on any of the Coronavirus business support available, please contact us on:

01483 416232