On 29 May, the UK Chancellor provided details of the proposed changes to the Coronavirus Job Retention Scheme (CJRS). The changes require employers to start sharing the cost of the furlough arrangement and allow a more flexible approach to working while on furlough.
The Government is introducing a more flexible furlough arrangement. Employers will be able to bring previously furloughed employees back to work part time from 1 July, a month earlier than previously announced.
Employers will have flexibility to determine the hours worked and the shift pattern for their employees. They will then pay the full wages for the hours worked by the employee, but will be able to claim under the CJRS for the hours that the employees are not working.
The employee must agree to the new flexible furlough arrangement in writing. Employers can claim the grant under the CJRS for the hours the employee is not working, calculated by reference to the usual hours worked in a claim period.
Further guidance on how to calculate the amount to be claimed and the usual hours will be published on 12 June.
CJRS closed to new entrants from 30 June
The CJRS 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 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, in order for the current three-week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.
From 1 July, claim periods will no longer be able to overlap with calendar months. Employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this.
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.
Employers can continue to make claims in anticipation of an imminent payroll run, at the point payroll is run or after payroll has been run.
From 1 August 2020, the Government will require employers to make a contribution towards the remuneration costs of furloughed employees. The level of contribution will increase gradually:
- For June/July there will be no contribution required from employers and the Government will continue to fund the CJRS paying 80% of wages up to a cap of £2,500 as well as employer National Insurance Contributions (NICS) and employer pension contributions for the hours the employee doesn’t work. Employers will have to pay employees for the hours that they work.
- From 1 August employers will be asked to pay NICS and employer pension contributions. These can no longer be reclaimed under the CJRS.
- From 1 September the Government will cover 70% of wages up to a cap of £2,187.50 for the hours the employee does not work. The employer will pay at least 10% (in addition to the NICS and pension contributions). This means that employees will continue to receive the minimum 80% or £2,500 (whichever is less).
- From 1 October the Government will pay 60% of wages up to a cap of £1,875, with employers paying up to 20%.
Employers are still able to choose to top-up employee wages above the scheme grant. The intention remains that the scheme will close at the end of October.
Self-employment Income support scheme.
Applications for the self-employed who are on the self-employed scheme will also be extended. Under that scheme, self-employed individuals who qualify can claim a taxable grant of up to 80 % of their average monthly trading profits, paid in a single instalment to cover three months and capped at £7,500 in total. Applications for the first grant opened on 13 May 2020 and will close on 13 July 2020.
The Government has agreed make a second and final grant available which will be capped at £6,750 in total. Applications for the final grant will open in August.
The Government has issued a fact sheet providing an outline of the changes for both schemes.