Coronavirus Job Retention Scheme: Latest update 2nd June 2020
Chancellor Rishi Sunak announced on Friday 29 May 2020 the latest set of changes to the Coronavirus Job Retention Scheme (CJRS), under which employers can place their employees on “furlough”, with up to 80% of wage costs (up to a cap of £2,500/month).
He confirmed that the CJRS will end on 31 October 2020, as previously announced, but it will be phased out over a number of months, with employers being required to take on an increasing share of the costs from August onwards. Media speculation before the announcement had expressed concern that a sudden end to the CJRS would trigger a wave of redundancies, if employers had insufficient demand to bring workers off furlough and back into work. Sunak’s tapered approach therefore seems designed to allay some of these concerns.
The Chancellor has also introduced a new concept of flexible furlough. At present, a furloughed employee is not permitted to carry out any work for their employer. However, with effect from 1 July 2020, employees will be able to work on a part-time basis, and be paid in full by their employer for the work that they do. For the remainder of an employee’s normal hours which are not worked, the employer will still be able to claim back wage costs under the CJRS. More detailed guidance on flexible furloughing (and how employers should calculate claims) is due to be published on 12 June 2020.
A summary of the phased end to the CJRS is set out below, with the caveat that the formal documentation to put this in place has not yet been put in place:
• 10 June 2020 – this will be the last day that employers can place employees on furlough, after which we understand the CJRS will be closed to new entrants.
• 1 July 2020 – ‘flexible furlough’ introduced, as described above. Employers can decide the balance of time to be split between part-work and furloughed status.
• 1 August 2020 – employers will no longer be reclaim employee NICs and pension contributions through the CJRS, in the way that they can at present.
• 1 September 2020 – the CJRS will reimburse 70% of salary (up to a cap of £2,190/month). The employer will be required to top-up the additional 10% to 80% (if that is the arrangement in place with the employee).
• 1 October 2020 – the CJRS will reimburse 60% of salary (up to a cap of £1,875/month). Employers will again be required to top up to 80% (or more, if that is what has been agreed).
• 31 October 2020 – furlough scheme closes.
Finally, the support offered to employers has also been extended to the self-employed workforce, in an extension of the Self-Employment Income Support Scheme (SEISS). The SEISS has already received 2.3m claims for its first round of grants, and eligible self-employed workers will be able to claim a second (and final) grant in August 2020 . The grant will be worth 70% of their average monthly trading profits (compared with 80% in the first round), and is capped at £6,570 in total.
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