1st June 2020 - Changes to Coronavirus Job Retention Scheme (CJRS)

1st June 2020 - Changes to Coronavirus Job Retention Scheme (CJRS)

On 29 May 2020, the Chancellor Rishi Sunak announced further details of the changes to the Coronavirus Job Retention Scheme (the Scheme). We’ve outlined these below for you

Flexible furloughing

From 1 July 2020, employers will be able to bring furloughed employees back to work on a part-time basis. Employers will be able to decide the hours and shift patterns that employees will work but must agree those with the employee and confirm that agreement in writing.

Further guidance on the flexible furlough arrangements will be published on 12 June but what is clear to date is that for anyone who is brought back part time, the employer can only claim the grant for their normal hours not worked and for worked hours, employees will be paid by their employer and employers will have to pay tax and NIC due on those worked hours paid.

Subject to the above, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance and pension contributions.

Employer contributions

From August, the government grant provided through the job retention scheme will be slowly tapered.

  • in June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work
  • in August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed
  • in September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500
  • in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
  • the cap on the furlough grant will be proportional to the hours not worked.

Around a quarter of CJRS monthly claims relate to wages that are below the threshold where employer NICs and auto enrolment contributions are due, and so no employer contribution will be required for these furloughed employees in August.

Cut-off date

The Scheme has been extended until 31 October 2020. However, from 30 June 2020 the Scheme will be closed to new entrants. From this date onwards, employers will only be able to furlough employees that have been furloughed for the full 3-week minimum period prior to this date. This means the final date by which an employer can furlough an employee for the first time will be 10 June 2020. Employers will have until 31 July 2020 to make any claims in respect of the period to 30 June 2020.

The Aaron Associates will continue to monitor and report on the situation as it develops.

Please contact us on 0208 6650767 for further information

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