Changes have been announced to the CJRS that affect sums employers will have to pay in wages and pension contributions.
1. What are the changes?
The Chancellor has announced the following:
- From 1 July 2020, the scheme is to be more flexible enabling employers to bring previously furloughed employees back part-time whilst still receiving a grant for the time when they are not working.
- From 1 August 2020, employers will have to meet some of the costs of paying their furloughed staff. This will gradually increase in September and October.
- The scheme will close to new entrants from 30 June 2020.
2. Part-time furloughing
From 1 July 2020, it will be possible to bring previously furloughed employees back to work part-time. If advantage is taken, the Government will continue to pay 80% of wages for any of their normal hours not worked up until the end of August. Employers are responsible for paying wages in full for any hours that are worked.
Arrangements for bringing employees back to work must cover at least one week, and be confirmed to the employee in writing.
If employees are unable to return to work, or there is no work to be undertaken, they can remain on furlough. The employer can continue to claim the grant for their full hours under the existing rules of the CJRS.
3. Employer Contributions
From 1 August 2020, the grant provided through the CJRS will be slowly reduced:
- in June and July, the Government will still 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 are responsible for paying employees for the hours they work
- in August, whilst the government will continue to pay 80% of wages up to a cap of £2,500, they will no longer meet ER NICs and pension contributions. Employers will have to meet these payments
- 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 be required to pay ER NICs, pension contributions and 10% of an employee’s wages to make up the 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 then be required to pay ER NICs, pension contributions and 20% of wages to make up the 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.
4. Important Information
The CJRS is to close to new entrants from 30 June 2020. After this, employers are only able to furlough employees that they have furloughed for a full three-week period prior to 30 June. This means the latest an employee can be furloughed for the first time is 10 June 2020.
Employers will also only have until 31 July to make any claims in respect of the period to 30 June.