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Amy White

Associate Solicitor - Uckfield

The Coronavirus Job Retention Scheme: Update 29 May 2020

A new update to the Coronavirus Job Retention Scheme was provided on 12 June. Click here for the latest update

On Friday, 29 May 2020 the Chancellor of the Exchequer set out a number of changes to the Coronavirus Job Retention Scheme (CJRS) which will take effect over the next few months.

While updates to the associated Treasury Direction and HMRC’s Employer Guidance are awaited, the key updates are as follows:

Scheme Duration:

The CJRS will close to new entrants from close of business on 30 June 2020 (with the scheme closing entirely on 31 October 2020).

What does this mean in practice?

This means that the final date by which an employer can furlough an employee for the first time will be 10 June 2020. From this point on, employers will only be able to furlough employees that they have already furloughed for a full three-week period prior to 30 June 2020.

Part-time Working during Furlough: 

From 1 July 2020, ‘flexible furlough’ is being introduced, allowing employees to work part-time and be furloughed part-time, as determined by their employer business.  This change has been brought forward from August 2020.

What does this mean in practice?

This means that from 1 July 2020, employers will be able to bring furloughed employees back to work part time, for any number of hours and any shift pattern, without completely ending their furlough leave.

The employer can continue claiming under the CJRS for the employee’s normal hours not worked, but will have to pay in full for any hours worked (and will be responsible for tax and NICs on those payments).

Note that in order to be eligible under this part of the scheme, any working arrangement must be for a minimum period of one week, must be agreed with the relevant employee and must be confirmed in writing. We recommend that legal advice be taken in connection with preparing associated communications.

A little more information in connection with ‘flexible furloughing’ is set out here: however, further guidance will be published on 12 June 2020.

Grant Tapering:

From 1 August 2020, the level of the grant available to employers under the CJRS will be slowly tapered to reflect the fact that people will be returning to work, albeit the amount a furloughed employee receives should not fall below 80% of wages. This means employers will have to start contributing to employee wage costs under the scheme in the following ways:

  • From August, employers will have to pay pension contributions and NICs.
  • From September, employers will have to pay 10% of wages.
  • From October, employers will have to pay 20% of wages.

What does this mean in practice?

This means that from 1 August 2020, while the Government will continue paying 80% of wages up to the £2,500.00 cap, employers will no longer be able to claim pension contributions and NICs via the CJRS. It’s of note that an early assessment of CJRS claims suggests that around 40% of employers have not made a claim for employer pension contributions or NICs under the scheme and so will be unaffected by this change.

Thereafter, from 1 September 2020, the Government will only reimburse 70% of salary (up to a maximum of £2,190.00), meaning employers will be required to cover the top-up to 80% (or more, depending on what the employer agreed with the employee).

Finally, from 1 October 2020, the Government will only reimburse 60% of salary (up to a maximum of £1,875.00), meaning employers will be required to cover the top up to 80% (or more, depending on what the employer agreed with the employee).

Contact us

For more information on employment law issues and the impact of Covid-19 contact Victoria Regan or Amy White in Rix & Kay’s Employment Team. This advice is current as of 1 June 2020.

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