Written by Brabners LLP
Since the Coronavirus Job Retention Scheme (“CJRS”) was announced in March, 8.7 million workers, which is over a quarter of the UK’s workforce, have been furloughed. The government’s latest figures show that £17.5 billion has been claimed under the CJRS.
On 29 May 2020, the Chancellor, Rishi Sunak, announced changes to the CJRS which will take effect over the coming months. He also confirmed that the scheme will end for good on 31 October 2020.
The CJRS will close to new entrants on 30 June 2020. This means that the last date on which employers can furlough employees who haven’t previously been furloughed is 10 June 2020 (so that they can complete the 3-week minimum furlough period by the cut-off date of 30 June).
Currently, it is a condition of the CJRS that employees who are on furlough are not allowed to do any work for their employer. However, according to the Chancellor’s announcement, from 1 July the CJRS will become more flexible, meaning that employees who have previously been furloughed will be able to work part-time and be furloughed part-time. Employers will be able to agree with employees what their working pattern will be during this period. Employers must pay employees in full for any hours worked, but furlough pay will be available for normal hours not worked.
Furloughed employees should continue to receive 80% pay for normal hours not worked, subject to a monthly cap of £2,500. However, the Government contribution to furlough pay will gradually reduce as follows:
- from 1 August 2020, the government will pay 80% of wages up to £2,500 a month but employers must start paying employer National Insurance contributions (NICs) and employer pension contributions;
- from 1 September 2020, the government will pay 70% of wages up to £2,187.50 a month. To make up the 80% total (subject to the £2,500 cap), employers must pay 10% of wages plus employer NICs and employer pension contributions; and
- from 1 October 2020, the government will pay 60% of wages up to £1,875 a month. To make up the 80% total (subject to the £2,500 cap), employers must pay 20% of wages plus employer NICs and employer pension contributions.
Further details about the flexible furlough scheme are expected on 12 June 2020.
This bulletin is for general guidance purposes only and should not be used for any other purpose. Brabners is a Limited Liability Partnership