In mid May the Chancellor gave the welcome announcement that he was extending the Coronavirus Job Retention Scheme (CJRS) until October and that flexibility around hours worked would be introduced in August. On Friday 29 May, he made a further important announcement, which considerably amended the plan. This is important to understand as many employers gear up to re-open or ramp up their operations.
What are the key changes to the Coronavirus Job Retention Scheme?
- If you want to furlough any new people you need to do so by or on 10 June 2020. The guidance says the scheme will close to new entrants from 30 June – but actually it is 3 weeks earlier as from 30 June, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June;
- Employers will have until 31 July to make any claims in respect of the period up to 30 June. This is not long, so ensure that your team or any third party working on this for you (such as accountants or payroll clerks) are aware of this date;
- From 1 July: employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked. Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June. We do know that when claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of a week. Employers will be responsible for paying wages, tax and national insurance for time spent at work;
- It looks likely that employers will have a lot of flexibility on what you can require previously furloughed employees to do. Although it seems the new flexible furloughing arrangements will need to be agreed and those changes will need to be confirmed by the employer in writing. A factsheet produced by the Government for employers and the self-employed is available here;
- Through June and July, grants claimed will continue to be paid on the basis of the Government paying 80% of wages up to a cap of £2,500 as well as employer National Insurance and pension contributions;
- From August: the level of Government grant will be slowly tapered to reflect that people will be returning to work. From 1 August 2020, the Government will still pay 80% of wages up to a cap of £2,500, but employers will need to pay the Employer National Insurance costs and pay for pension contributions. The Government says for the average claim this works out as the employer paying about 5% more of the gross employment costs had the employee not been furloughed;
- From 1 September: The Government will pay 70% of wages up to a cap of £2,187.50. Employers will pay Employer National Insurance costs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. The Government says for the average claim that this works out as the employer paying 14% of the gross employment costs had the employee not been furloughed;
- From 1 October: The Government will pay 60% of wages up to a cap of £1,875. Employers will pay Employer National Insurance costs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this is said to amount to around 23% of the gross employment costs the employer would have incurred had the employee not been furloughed;
- The furlough scheme will close on 31 October 2020; and
- Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked. It is very important you keep accurate records of this. Employees who believe they are not getting their 80% share can also report any concerns to the HMRC fraud hotline. HMRC will not hesitate to take action against those found to be abusing the scheme.
Our Key Questions Answered article still contains the nuts and bolts about how the Scheme operates during Coronavirus in terms of who to claim and how to furlough people.
No doubt many businesses are considering bringing people back to work and the shape of their workforce to come.
Common questions we are being asked are:
- What do I need to consider when I want to bring someone back from furlough?
- What if my employee refuses to return from furlough?
- Can I un-furlough someone and ask them to work but on reduced hours and pay?
- I may need to make redundancies in the future. Can I make someone who has been furloughed redundant, even though the Scheme is continuing?
- Can I consult with my employees on our works council/staff forum even though they are furloughed?
- I know I need to follow the Government rules for social distancing and hygiene, but what other legal issues are there around my staff returning to work after the lockdown?
For answers to these questions please see our FAQs on Un-Furloughing article.
Some businesses are concerned that despite the CJRS and this flexibility, they are sadly not going to be able to support all their employees in the future and may need to make redundancies. Our experienced team can help guide you through this. You may find our Life After Lockdown article useful which has links to the support packages we can provide.