Update on the Coronavirus Job Retention Scheme (CJRS)

On the 29 May daily briefing, the Chancellor set out more details on how the Coronavirus Job Retention Scheme (CJRS) will continue to support jobs and businesses as people return to work, following the announcement of an extension of the scheme on 12 May.

So far, the CJRS has helped 1 million employers across the UK furlough 8.4 million jobs, protecting people’s livelihoods, but it is set to end on 31 October.

From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part-time. This is a month earlier than previously announced to help support people back to work. Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them - and will be responsible for paying their wages while in work.  More details on this change is set out below.

From August 2020, the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work. That means that for June and July the government will continue to pay 80% of people’s salaries. In the following months, businesses will be asked to contribute, 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. 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 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 and 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 and pension contributions and 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.

Chancellor Rishi Sunak said “Our top priority has always been to support people, protect jobs and businesses through this crisis. The furlough and self-employment schemes have been a lifeline for millions of people and businesses…..Now, as we begin to re-open our country and kickstart our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world.”

Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.

Employers will need to take care to get their employees pay entitlements right, especially when reflecting the changes outlined above. The Government’s online guidance states “Employees who believe they are not getting their 80% share can also report any concerns to the HMRC fraud hotline. HMRC will not hesitate to take action against those found to be abusing the scheme.”

Part-time furloughed employees

From 1 July, employers will be able to agree any working arrangements with previously furloughed employees, potentially bringing furloughed employees back on a part-time basis.  The time spent in work by the employee will need to be paid in accordance with their employment contract.

To enable the introduction of part time furloughing, and support those already furloughed back to work, claims from July onwards will be restricted to employers currently using the scheme and previously furloughed employees. The scheme will close to new entrants on 30 June, with the last three-week furloughs before that point commencing on 10 June.

When claiming the CJRS grant for furloughed hours; employers will need to report and claim for a minimum period of a week, for grants to be calculated accurately across working patterns.