Employment Briefing – 5 June 2020 The Updates To The Coronavirus Job Retention Scheme (“CJRS”) For Furloughed Employees
Following Rishi Sunak’s announcement on Friday 29 May 2020, further guidance has now been released regarding the continuation of the CJRS for furloughed employees. It has been confirmed that the CRJS will continue until 31 October 2020, meaning that many employees will be furloughed for 8 months in total.
The CJRS will continue in its current form until 31 July 2020.
With effect from 1 August 2020, the CJRS will continue with some significant changes, which are summarised in this Briefing.
1. Important timing requirements
CJRS will close to new entrants from 30 June 2020. From this point, employers will only be able to furlough employees who have previously been furloughed for at least a full three-week period prior to 30 June 2020.
This means that the final date by which an employer can furlough an employee for the first time is 10 June 2020.
From 1 July 2020 the scheme will only be available to employers who have previously used the scheme in respect of employees that they have previously furloughed.
2. Gradual reduction of Government grant – increased costs for employers from 1 August 2020
From 1 August 2020, the level of the CRJS grant will gradually be tapered down.
Initially, in August, employers will only be required to pay employer NICs and compulsory employer pension contributions arising in respect of furloughed pay. The Government will still reimburse the employer the full 80% of a furloughed employee’s gross pay (subject to the £2,500 monthly cap). Employers may already be paying the 20% balance to employees and this would continue in accordance with any agreements reached with employees.
In September, the employer will also be required to pay 10% of an employee’s gross pay while on furlough, so the Government pays 70% and the employer pays 10%.
In October, the balance of payments will change again, with the employer paying employer NICs and compulsory employer pension contributions arising in respect of furloughed pay, together with 20% of that furloughed pay, with the Government’s contribution dropping to 60%.
The table below from the Guidance summarises the position:
|Government contribution: employer NICs and pension contributions||Yes||No||No||No|
|80% up to £2,500||80% up to £2,500||70% up to £2,187.50||60% up to £1,875
employer NICs and pension contributions
|–||–||10% up to £312.50||20% up to £625|
|Employee receives||80% up to £2,500
|80% up to £2,500
|80% up to £2,500
|80% up to £2,500
This means that CJRS will become increasingly expensive for employers from 1 August 2020.
3. New Flexible Furlough from 1 July 2020
From 1 July 2020, employers will be able to bring furloughed employees back to work for them part-time. Although they will continue to be able to claim the CJRS grant for the employees’ unworked normal hours, they must pay employees’ full contractual salary for any hours worked (plus taxes and national insurance contributions due on salary) .
In other words, employees can be brought back to work on a reduced time basis and remain “furloughed” for their non-working time. This is different to the previous version of CJRS, where employees were not permitted to do any work for their employer.
For example, an employer will be able to ask an employee who ordinarily works 5 days per week to return to work 2 days per week, but keep them furloughed for the remaining 3 days. The employer can claim under CJRS for the 3 non-working days, but must pay their contractual salary for hours worked on their 2 working days per week.
Any time split between furlough/working time can be agreed, depending on business needs, and the arrangement can be altered from time to time. The new arrangement must be agreed in writing with the employee.
Further guidance will be published on 12 June 2020. As with previous iterations, the devil will be in the detail and we will keep clients updated here.
Please contact our Employment Lawyers, Nicola Tager or Lucy Cinnamond for further information or advice.