On Friday 29 May 2020, the Chancellor announced reforms to the Coronavirus Job Retention Scheme (CJRS) (also known as furlough leave) and outlined a number of changes that will take effect over the next few months. The government have published a factsheet which can be access here. The key points for employers to be aware of are as follows:
Closure of the scheme to new employees
The scheme will be closed to new entrants from 30 June meaning that any employee that has not been furloughed prior to this date will not be eligible for furlough for the remainder of the scheme period. As new entrants will be required to have been on the scheme for at least 3 weeks before 30 June, this means that 10 June will be the last day that employers can place employees on furlough. Employers who are considering putting an employee on furlough but has not already done so since the scheme was introduced should review the situation now to avoid missing the opportunity to furlough.
From 1 July, claim periods will no longer be able to overlap calendar months. This is necessary to reflect the forthcoming changes to the scheme with regard to employer contributions to wages. You should be conscious of this when planning your furlough rotations to ensure that no-one is on a period of furlough which spans over 2 separate months.
Employers to contribute to the cost of furlough
This will be introduced in a staggered way as employers are asked to make increasing contributions towards the furloughed employees’ wages. At the moment, the government pays 80% of wages up to a cap of £2,500 plus associated NI and pension costs.
From 1 August: The government will continue to pay 80% of wages up to a cap of £2,500 but the employer will have to pay the employer’s National Insurance and pension contributions. Those costs will no longer be reclaimed through the CJRS.
From 1 September: The government will pay up to 70% of wages up to a cap of £2,187.50. The employer will have to pay the employer’s National Insurance and pension contributions as well as 10% of wages in order to top-up the employee’s pay to 80% of wages overall.
From 1 October: The government will pay up to 60% of wages up to a cap of £1,875. The employer will have to pay the employer’s National Insurance and pension contributions as well as 20% of wages in order to top-up the employee’s pay to 80% of wages overall.
The CJSR scheme will end on 31 October and employers will then be responsible for all of the employees costs.
From 1 July, employers should be able to bring back staff from furlough leave on a part-time and more flexible basis. The employer will have to bear all of the costs for an employee for the time they have worked and the government will contribute to the costs of the employee when they are at home, “furloughed”. The government is expected to announce new guidance on this over the next 2 weeks and we will provide you with further information and guidance once we have it.
If you need any advice about the changes being imposed to the coronavirus job retention scheme or about issues these changes may create for your business please do not hesitate to contact the Employment team.