Coronavirus Job Retention Scheme update

On Friday the Chancellor announced that changes to the Coronavirus Job Retention Scheme (CJRS) will apply a month earlier than expected. From 1 July the scheme will allow part-time working, but staff must have been furloughed by 10 June to be eligible.

On Friday the Chancellor announced that changes to the Coronavirus Job Retention Scheme (CJRS) will apply a month earlier than expected. From 1 July the scheme will allow part-time working, but staff must have been furloughed by 10 June to be eligible.

The Chancellor has announced the government's plans to change the CJRSwhich will now be re-engineered to support businesses sending staff back to work. Employers will be able to put staff on part-time furlough, claiming the CJRS grant for a portion of their salary. Critically, employers will only be able to claim going forward if they have previously claimed under the pre-1 July scheme.

Note too that as there is a three-week minimum furlough requirement under the current rules, it follows that any new period of furlough leave must have started by 10 June 2020 to be complete when the current scheme ends on 30 June and so ensure the employee remains eligible from 1 July.

The proposed changes also introduce a new limit to the number of staff who can be included on a claim. This will be based on the maximum staff ever included in any single pre 1 July claim. The Chancellor also confirmed that from 1 August the CJRS grant will no longer cover the cost of employers' National Insurance nor pension contributions, with employers expected to cover the costs.

What is changing when?

  • July - the grant will be available on the same basis as now (the lesser of 80% of pay and £2,500 per month), but with added flexibility to enable staff to work part-time. For those staff who are furloughed part-time, employers will be required to pay for the cost of the time staff are working. A grant will be available for the cost of their furloughed hours.
  • August - the CJRS will continue to pay 80% of wages. However, the grant will no longer pay for the National Insurance or pension contributions.
  • September - the CJRS will pay 70% (capped at £2,187.50 per month) of wages, while employers will take on the other 10%
  • October - the CJRS will pay 60% (capped at £1,875 per month) of wages, while employers will take on the other 20%

Throughout the duration of the furlough scheme it is important to remember that the employee will continue to receive their salary entitlement as set out by the terms of their employment contract and agreed furlough arrangements, being no less than 80% of their pay. The CJRS is a grant paid to the employer, and it is this grant which is now being scaled back, the calculation being based on the salary paid for any period while the employee is being furloughed.

Employees must have been furloughed under the current scheme (CJRS V1) for them to be eligible for a furlough grant under the revised scheme (CJRS V2). So, in practice, only employees who have been included in a furlough grant claim dated before 1 July 2020 can be furloughed under CJRS V2.

Further points to note about CJRS V2

  • A new minimum reporting period of one week will apply from 1 August 2020. More frequent claims will not be accepted, but the reporting period can be longer.
  • From 1 July, claim periods will no longer be able to overlap months, employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this going forward. This is necessary to reflect the forthcoming changes to the scheme.
  • The new calculation will apply from 1 July to factor in the cost of hours worked to hours furloughed ratio.
  • Employers can claim the grant for the hours their employees are not working calculated by reference to their usual hours worked in a claim period. Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period. 
  • CJRS V2 will end on 31 October 2020.

Further details on these changes will be issued by HMRC on 12 June.

From our point of view, the added flexibility of part time working whilst on furlough from 1 July will be very welcome for many of our clients. You should be aware though of the gradual scaling back of the grant from August onwards, and ensure that these changes are fully understood when making staffing decisions.

We will of course be on hand to assist you on queries that you have on these changes in due course, and we will update you again once further details have been issued in a couple of weeks' time.

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