On 29 May 2020, the Chancellor announced changes to the Coronavirus Job Retention Scheme which will apply from 1 July 2020.
What is changing?
The Chancellor’s much-anticipated announcement outlined three key changes to the CJRS. These were: closure to new entrants, flexible furloughing and tapering of the government grant.
Closure to new entrants
The scheme will continue on its current terms until 30 June 2020. From that point, it will be closed to claims for any employees who have not previously been furloughed for at least three weeks. In practice, this means that the last date by which an employer can furlough an employee for the first time will be 10 June 2020.
Under the current terms of the scheme, an employee must cease all work for their employer in order to be eligible for a grant. From 1 July, greater flexibility will be introduced allowing employees to work for any amount of time, on any shift pattern, and still be eligible for a CJRS grant in respect of hours not worked. The new arrangements must be agreed with the employee and confirmed in writing. Pay for hours worked will be funded by the employer; the CJRS grant will continue to cover 80% of wages for non-worked hours, up to the current cap of £2500.
Tapering of the CJRS grant
From 1 August, as employers prepare for a gradual return to the workplace, the funding under the scheme will reduce and a greater proportion of furloughed wages will need to be paid by employers.
The tapering will operate as follows:
- August: the amount of wages to be funded under the CJRS will remain at 80% (subject to the cap). However, the employer will be required to pay employer NICs and any mandatory employer pension contributions.
- September: the CJRS grant will reduce to 70% of wages (subject to a cap of £2,187.50) and the employer will be required to fund 10% of wages, plus employer NICs and mandatory pension contributions.
- October: the CJRS grant will reduce to 60% of wages (subject to a cap of £1,875) and the employer will be required to fund 20% of wages, plus employer NICs and mandatory pension contributions.
The scheme will come to an end on 31 October 2020. Throughout, furloughed employees will receive 80% of wages for all non-worked hours.
The government will publish further detail on the amended scheme in mid-June.