The Coronavirus Job Retention Scheme: Update 12 June 2020
On Friday, 12 June 2020 HM Revenue and Customs (HMRC) announced and published further updates to the Coronavirus Job Retention Scheme (CJRS) which will take effect from 1 July 2020.
The key changes are as follows:
Coronavirus Job Retention Scheme – 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?
This means that from 1 July 2020, employers will only be able to furlough employees under the CJRS if they have previously been furloughed for a minimum period of three consecutive weeks, between the period of 10 March and 30 June 2020.
Therefore, the last day on which employers could furlough their employees for the first time was 10 June 2020. This however, does not apply to employees returning after 10 June 2020 from a period of statutory maternity, paternity, adoption, shared parental or parental bereavement leave, meaning that they will still be eligible for furlough under the CJRS, providing that the employer has used the CJRS for other eligible employees prior to that date.
Claims under CJRS, ending on or before 30 June 2020, must be submitted by 31 July 2020.
Coronavirus Job Retention Scheme – Minimum Furlough Periods:
Up until 1 July 2020, employees placed on furlough must have been furloughed for a minimum of three consecutive weeks. They could be furloughed multiple times so long as they were furloughed for a minimum of three consecutive weeks.
From 1 July 2020, the minimum three consecutive week period will no longer exist however, if you submit a claim under the CJRS, it must be for a minimum of seven calendar days. Additionally, claims submitted on or after 1 July 2020 cannot cross over into different calendar months.
What does this mean?
This means that an employee who has previously been furloughed can start a new furlough period on 15 June 2020 which must continue for at least three consecutive weeks ending on or after 5 July 2020. After 1 July however, claims submitted under the CJRS must not cross calendar months, meaning that an employer will need to make a separate claim for the period of 15 to 30 June and 1 to 5 July 2020, even if employees are furloughed continuously.
Thereafter, employers must ensure that claim periods starting on or after 1 July 2020 start and finish within the same calendar month and must be for at least seven calendar days, unless the period they are claiming for includes the first or last day of the calendar month and employers have already claimed for the period immediately before it. This change means that employees will no longer need to complete three consecutive weeks of furlough, instead they must complete at least seven full calendar days in each month.
Coronavirus Job Retention Scheme – Flexible Furlough:
With effect from 1 July 2020, employers are permitted to bring furloughed employees back to work for any amount of time and any work pattern, whilst claiming under the CJRS for the hours not worked. This is known as ‘Flexible Furlough’.
What does this mean?
This means that employees who have been furloughed on or after 1 July 2020 can be brought back to work on a part-time basis in order to carry out their job role however, the hours not worked are still eligible to be claimed under the CJRS. For example, employers can choose to bring their employees back to work for two days per week, but furlough them for the other three days (based on a person working a five day week).
During this period, employees will continue to receive 80% of their wages (up to a cap of £2,500) for the hours/days they are on flexible furlough. Employers must pay their employees for the hours they work in each calendar month at their normal rate of pay.
If employers flexibly furlough employees, they must ensure that a new written agreement which confirms the working arrangement is given to employees.
Employers must keep records of how many hours their employees work for them and how many hours they are furloughed.
Employers can choose to continue to furlough their employees fully if necessary.
If employers decide to furlough employees under the new flexible scheme, they must ensure that hours claimed under the CJRS are correct. Failure to do so, resulting in employees working more hours than anticipated, will result in employers being required to refund some of the grant back to HMRC.
Find out more about how to correct a Coronavirus Job Retention Scheme claim here
Details of how to calculate the amount to be claimed for a flexible furlough employee are set out here
Changes to the Coronavirus Job Retention Scheme Grant from August to October 2020:
August 2020: HMRC will continue to pay 80% of wages (up to a cap of £2,500) for the hours/days an employee is on furlough. Employers will pay National Insurance Contributions (ER NICs) and pension contributions.
September 2020: HMRC will pay 70% of wages (up to a cap of £2,187.50) for the hours/days an employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages (up to a cap of £2,500) for the period they are furloughed.
October 2020: HMRC will pay 60% of wages (up to a cap of £1,875) for the hours/days an employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages (up to a cap of £2,500) for the period they are furloughed.
Employers can choose to continue to top up employees’ wages above 80% (and the £2,500 cap) for the hours not worked at their own expense.
This advice is current as of 15 June 2020.