Changes to the Coronavirus Job Retention Scheme

The Chancellor has announced changes to the Coronavirus Job Retention Scheme (CJRS) with the aim of helping to support people back to work.

Under the changed scheme furloughed employees will continue to receive 80% of their salaries up to a maximum of £2,500 per month.  But by October employers will have to meet almost a quarter of their salaries.

Changes to government and employers’ contributions

• From 1 July 2020 furloughed employees will be allowed to return to work on a part time basis. This will be known as flexible furloughing. Employers will decide the hours and shift patterns their employees will work on their return.

Employers will be liable for 100% of the salaries for these employees for the time that they are working and be able to claim the CJRS grant for the balance of normal hours not worked.

Employers must agree with their employee any new flexible furloughing arrangement and confirm that agreement in writing.

The government will pay 80% of salaries up to a cap of £2,500 per month as well as employer’s National Insurance Contributions and employer’s pension contributions for the hours the employees do not work.

• From 1 August 2020 employers will have to pay the employer’s National Insurance and employer’s pension contributions for their furloughed employees when they are not working. The Government will continue to pay 80% of the employees’ salaries up to a maximum of £2,500 per employee, when they are not working.

Employers will have to meet the full salary costs of any flexibly furloughed employees whilst they are working.

The Chancellor advised that, for the average claim, the cost to employers for fully furloughed employees will represent 5% of the employees’ salaries had they not been furloughed.

• From 1 September 2020 employers will be liable for 10% of the salaries as well as the employer’s National Insurance and employer’s pension contributions for their furloughed employees, when they are not working. The Government will meet 70% of the salary costs up to a cap of £2,187.50 per employee, when they are not working.

Employers will have to meet the full salary costs of any flexibly furloughed employees whilst they are working.

The cost to the employer for fully furloughed employees will represent 14% of the average gross employment costs they would have incurred if the employees had not been furloughed.

• From 1 October 2020 employers will be liable for 20% of the salaries as well as the employer’s National Insurance and employer’s pension contributions for their furloughed employees when they are not working. The Government will meet 60% of the costs up to a cap of £1,875 per employee, when they are not working.

Employers will have to meet the full salary costs of any flexibly furloughed employees whilst they are working.

The cost to the employer for fully furloughed employees will represent 23% of the average gross employment costs they would have incurred had the employees not been furloughed.

Other Changes

• The scheme will be closed to new entrants from 30 June 2020.

From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3-week period prior to 30 June 2020.  This means that the final date an employee can furlough an employee will be 10 June 2020.

• Employers will have until 31 July 2020 to make any CJRS claims in respect of the period to 30 June 2020.

• From 1 July 2020 CJRS claim periods will no longer be able to overlap calendar months.

• The number of employees an employer can claim for in any claim period will not be able to exceed the maximum number they have claimed for in any previous claim under the current CJRS rules.

• Employers can continue to make claims in anticipation of an imminent payroll run at the point the payroll is run or after the payroll has been run.

• Employers will be able to make their first claim under the new scheme rules from 1 July 2020.

• As with the current CJRS, employers are still able to choose to top up employees’ salaries above the scheme grant at their own expense if they wish.

Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June 2020.

If you have any concerns about the forthcoming changes we would urge you to get in touch with us as soon as possible.

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.

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