On Friday 29 May, the Chancellor, Rishi Sunak, announced the gradual phasing out of the Coronavirus Job Retention Scheme (CJRS) over the coming months, with its complete closure set to take place on 31 October 2020.
The changes outlined by the Chancellor mean that employers will be expected to gradually take back responsibility for funding the salaries of furloughed employees until the CJRS ends.
The final deadline for placing employees on furlough was confirmed as 10 June. A ‘flexible furlough’ system will be introduced from 1 July, a month earlier than originally planned. Essentially, this means that employees can work part-time and be furloughed part-time, with the details of how this will operate in practice to be determined by the employer. Claims can still be made under the CJRS for the normal hours not worked by these employees, however, employers will have to pay in full for any hours worked, as well as the tax and NI contributions on those payments.
To be eligible for ‘flexible furlough’ a new written agreement will have to be established between the employer and their employees. Further guidance on ‘flexible furlough’ and calculating claims will be made available by the Government on 12 June.
From 1 August, employers can no longer reclaim employee’s national insurance contributions and pension contributions through the CJRS. The employer must fund these again from that date.
The Government’s contribution to the salary of furloughed workers will be reduced from 80% to 70% (up to a maximum of £2,190 per month) as of 1 September. Employers will be required to top this up to 80% (or more, depending on the original agreement with the employee). The Government contribution will then reduce to 60% of salary (up to a maximum of £1,875 per month) from 1 October until the closure of the furlough scheme on 31 October 2020.
The grant available to self-employed workers will also be extended. From August, applications can be made for a second and final grant. This will mirror the tapering of the furlough scheme and, accordingly, pay 70% of average earnings up to £6,750.
If you would like any support in managing your staff through the furlough scheme or need help with any other employment matters, please feel free to get in touch with a member of the team.
