Changes to the Coronavirus Job Retention Scheme (Furlough Scheme) Explained
On the 29 of May The Chancellor, Rishi Sunak, announced more details of the extension of the Coronavirus Job Retention Scheme (CJRS), including bring forward by one month the option to bring furloughed employees back part time.
With so much information coming out from the Government at the moment, Employment Partner, Sean McDonough highlights the key changes and more importantly the key deadlines for those changes over the next few months to enable employers to prepare to return employees back to work efficiently and effectively.
For June and July the Government will continue to pay 80% of wages (subject to the monthly cap of £2,500), employer national insurance (NI) and pension contributions for any furloughed employees provided they are not working for their employer.
Employers will remain responsible for paying 100% of wages for those employees that are working unless short term working has been agreed.
Importantly the CJRS will close to new entrants from 30 June. After the 30 June employers will only be able to furlough employees that have previously been furloughed for a full three week period prior to 30 June. So employers still considering using the CJRS scheme have until the 10 June to furlough an employee for the first time in order to meet the qualifying criteria.
From the 1st July employers will have the flexibility to bring previously furloughed workers back to work part-time. The CRJS will continue to pay for any hours unworked while the employer begins to pays for hours worked. To be eligible for the CRJS for part time employers must agree new flexible arrangements with the employee and confirm that agreement in writing.
In preparation for the start tapering of the CJRS from August there will be changes to the claim periods. From 1 July claim periods can no longer overlap calendar months and employers will be able to report and claim for a minimum period of one week rather than three weeks.
A tapering of the CJRS will begin. During August the Government will continue to pay 80% of wages up to the £2,500 cap for furloughed employees but employers will take over payment of employer NI and pension contributions.
In September, the Government contribution will lower to 70% of wages up to a cap of £2,187.50 for furloughed employees. Employers will continue to pay employer NI and pension contributions, and, additionally, must now pay 10% of wages to make up to 80% of the total wages, up to the cap of £2,500.
Finally, in October, the Government contribution will lower again to 60% of wages up to a cap of £1,875 for furloughed employees. Employers will continue to pay employer NI and pension contributions, and will have to pay 20% of wages to make up to 80% of the total wages, up to the £2,500 cap.
In is important to note that the cap on the furlough grant will be proportional to the hours not worked – so if the employee is not working for 50% of his or her normal working hours the cap would be £1,250 during July and August, £1,093.75 in September and £937.50 in October.
Further guidance on flexible furloughing and how employers should calculate claims is to be published on 12 June but in the meantime if you have any questions please contact Sean McDonough on 01225 750 000 or email email@example.com. Preparation and communication is key to ensuring your business maximises the benefits of this scheme.