Another announcement on the Coronavirus Job Retention Scheme, but this is at least a big one and will be genuinely helpful for forward planning. The changes concern how far employers will be required to contribute to the wage costs of staff who have been furloughed.
Key changes are: “Flexible Furloughing”.
- From 1 July employers will be able to bring furloughed staff back to work for any amount of time and on any shift pattern, but continue to be able to make a claim under the CJRS for any normal hours not worked. When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of a week.
- To be eligible for the CJRS grant, employers must agree with employees any new flexible working arrangements and confirm that agreement in writing. The government’s clear concern remains to prevent employers claiming what is in effect a subsidy on wage costs for time their people spend working.
- Further guidance on “flexible furloughing” will be published on Friday 12 June.
Closure to New Entrants from July.
- In line with press speculation this week, the CJRS will be closed to new entrants from 30 June. From this date onwards, employers will only be able to furlough employees who have already been furloughed for a full three-week period prior to 30 June. In practical terms, this means that the final date by which employers can furlough any individual employee for the first time will be 10 June (so that three-week minimum period can be completed by 30th). With 10th June less than two weeks away, it is critical that employers consider now whether they will need to furlough any more staff so they do not miss the closing date.
Employer Contributions to Wage Costs.
- As highlighted by the Chancellor a couple of weeks ago, employers will be required to make a growing contribution to wage costs for furloughed staff, although this is being introduced more gradually than expected. The announcement says that the caps below will be proportional to the hours worked, so if an employee works half a week, for example, employers can only claim £1,250 in respect of the unworked period, not £2,500.
See timeline below for a summary of the new rules:
June and July 2020 – The government will continue to pay 80% of wages up to a cap of £2,500 as well as employer National Insurance Contributions (NICs) and pension contributions for any hours the employee has not worked. As highlighted above, employers will have to pay employees for any actual hours worked by them and cannot claim under the CJRS for those hours.
August 2020 – The government will pay 80% of wages up to a cap of £2,500 but employers will now be required to pay the employer NICs and pension contributions for the hours the employee does not work (and also those where they do). According to the government, around 40% of employers have not made a claim for employer NICs costs or employer pension contributions under the CJRS.
September 2020 – The government will pay only 70% of normal wages up to a cap of £2,187.50 for any hours the employee does not work. Employers will be required to pay employer NICs and pension contributions plus 10% of wages to take them to the current 80%, still subject to the same cap of £2,500.
October 2020 – The government will pay only 60% of wages up to a cap of £1,875 for any hours the employee does not work. Employers will be required to pay employer NICs and pension contributions and 20% of wages to make up that 80% total, again subject to the £2,500 cap.
The CJRS will close on 31 October 2020. It is not beyond possibility that some serious reversals in the national fight against the virus may lead that to be revisited.