On Friday 29 May 2020 the government provided some long-awaited information regarding how the Coronavirus Job Retention Scheme (CJRS) will be wound down between now and the end of October 2020.
There has been some speculation that the scheme may be extended beyond October 2020 (with a further gradual winding down), but nothing has, as yet, been confirmed.
What are the key changes to Coronavirus Job Retention Scheme between July – October 2020?
Closure to new entrants
From 1 July onwards the CJRS will be restricted (a) to employers already using the scheme, and (b) to employees who have already been furloughed. Because of the (current) requirement for employees to be furloughed for a minimum of three weeks, this means that any new employees joining the scheme will need to be furloughed by 10 June 2020 at the latest. It is therefore important to act quickly, so as not to miss this deadline.
It appears likely that an employee furloughed for the first time on or before 10 June 2020 could return to work and then be furloughed again after 30 June 2020 (provided they spent at least three weeks on furlough). The government has not specifically stated this, but it seems quite clear from the updated guidance - see here.
The government had indicated that employers would be asked to ‘share’ the cost of furloughing employees, and it has now provided details in this regard.
Furloughed employees will continue to be entitled to receive 80% of their wages (up to a cap of £2,500 per month). However, employers will be required to contribute an increasing amount towards this:
- From 1 August – employers will pay the employee’s national insurance (NICs) and pension contributions;
- From 1 September – employers pay NICs, pension contributions and 10% of wages (with the government contributing 70% (to a monthly cap of £2,187.50)); and
- From 1 October – employers pay NICs, pension contributions and 20% of wages (with the government contributing 60% (to a monthly cap of £1,875)).
From 1 July 2020 (a month earlier than previously announced), furloughed staff will be able to return to work part-time whilst remaining eligible under the CJRS. Employers have the flexibility to agree with the employee what hours will be worked. Outline information has been provided as to how this will work, but further guidance is due to be published on 12 June 2020.
In terms of pay, employers will pay the employees in the usual way for the hours actually worked. For the hours not worked, they will be paid at the furlough rates outlined above.
To be eligible, employers will have to mutually agree with their employees a new flexible furloughing arrangement in writing. The arrangement will need to last a minimum of one week.
An important point to note is that the number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim under the current CJRS. This will need to be factored in when considering flexible furloughing. A claim period isn’t defined in the guidance, but guidance states an employer can choose their own (and when submitting a claim under the CJRS employers will have been asked to specify the period over which they are claiming).
It appears that the position will change from 1 July 2020. The new guidance states that from that date, claim periods will no longer be able to overlap months and employers who previously submitted claims with periods overlapping calendar months will no longer be able to do so going forward. In addition, there will be a minimum claim period of a week.
- Decide whether any employees not currently or previously furloughed may need to be furloughed. If so, the furlough arrangement will need to take place with effect from 10 June at the latest;
- Consider your plans for your workforce with effect from 1 July. Will you be wanting to take advantage of the ability to flex-furlough? If so, you should consider how this would work in practice. You will need to revisit this when the further guidance is published on 12 June; and
- For employees who are currently furloughed, check your furlough agreements/ letters (which will state that the employee cannot work for the organisation) to see what amendments will be required going forward.
If you would like our assistance, please do not hesitate to contact a member of our Employment team.