News & Insights: Employment

CORONAVIRUS JOB RETENTION SCHEME – UPDATE

5 June 2020

On 29th May 2020 the UK Government as expected, introduced reforms to the Coronavirus Job Retention Scheme (CJRS). As part of the reforms the Chancellor outlined provisions of the Scheme which will continue to support both jobs and businesses as employees return to work. The key dates and reforms are summarised below.

 

Deadline for new entrants & closure of the Scheme

 

It is important to note that the deadline for new entrants to the scheme is 30th June 2020. Following this date, employers will only be entitled to furlough employees who they have furloughed for a full three week period prior to 30th June 2020.

 

Therefore, the final date for employers who wish to place employees on the furlough scheme for the first time is 10th June 2020. This is to allow for the minimum furlough period of three weeks to be completed by 30th June 2020.

 

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

 

The CJRS will close on 31st October 2020.

 

Flexible Furloughing – What does this mean & how does this affect my business?

 

From 1st July 2020, flexible furloughing will be introduced, allowing furloughed employees to be brought back part-time, a month earlier than originally intended.

 

This will enable employers to bring back to work employees who have been previously furloughed for any amount of time and any shift pattern, whilst still being able to avail of the CJRS grant for their normal hours not worked. This will be subject to the relevant caps.

 

In respect of any hours worked, employees will be paid by individual firms, subject to their employment contract and employers will be responsible for tax and National Insurance Contributions due on those payments. The flexibility provided in terms of government and employer contributions will enable businesses to decide on the best approach for both themselves and their employees.

 

It should be noted that in order to be eligible for the grant, employers must agree any new flexible furloughing arrangements with their employees and such agreement must be confirmed in writing. When claiming the CJRS grant for furloughed hours, employers will be required to report and claim for a minimum period of a week. Employers will also be expected to account for the hours worked and the usual hours an employee would be expected to work in a claim period.

 

If a business does not wish to avail of part-time furloughing, they can continue to furlough their staff and benefit from the grant. However, employers should be mindful that they will be required to commence contributions to employees’ furlough pay as outlined below.

 

Government guidance on Flexible Furloughing:

 

It is expected that the Government will provide further guidance in respect of flexible furloughing and how employers should calculate claims on 12th June 2020.

 

Government contribution & required employer contribution – How will the CJRS taper?

 

The level of Government contribution provided via the CJRS will be tapered from August 2020 to reflect that employees will be returning to work. Businesses will therefore be required to contribute a modest share but employees will continue to receive 80% of their salary in relation to the time which they are unable to work.

 

The following contributions will be made during the below periods:

 

June & July 2020:

 

The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee doesn’t work.

 

Employers will be required to pay employees for the hours they work.

 

August 2020:

 

The government will pay 80% of wages up to a cap of £2,500 and employers will pay employer National Insurance Contributions (ER NICs) and pension contributions for the hours the employee does not work.

 

September 2020:

 

The government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work. Employers will pay employer National Insurance Contributions (ER NICs) and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.

 

October 2020:

 

The government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work. Employers will pay employer National Insurance Contributions (ER NICs) and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.

 

 

Please note that this advice is provided as general guidance only. If you require specific legal advice in respect of your business requirements, please contact our Employment Team.

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