New Coronavirus Job Retention Scheme
As you will no doubt be aware, the Chancellor announced last Friday substantial changes to the Coronavirus Job Retention Scheme (CJRS) and revised rules which apply from 1 July 2020, a summary of the key points is below and further guidance is due to be issued on 12 June.
Urgent action!
If there are any employees who you have not already furloughed under the current scheme but would like to benefit from the new flexible furloughing arrangements coming into place from 1 July, the last date you can place an employee on furlough for the first time is Wednesday 10 June.
The CJRS will close to new entrants on 30 June 2020 but employees must have been on furlough for 3 weeks prior to this date meaning the final date by which you can furlough an employee who has not so far been furloughed under the scheme is 10 June. So, if you are currently using the CJRS or are considering using the new scheme, you must ensure you reach agreement by 10 June with the relevant employees with respect to any new periods of furlough.
From 1 July, you will only be able to furlough employees that you have furloughed for a full 3 week period prior to 30 June. It is not clear from the government’s guidance whether employees who have previously been placed on and off furlough for three week periods under a ‘rotating furlough’ arrangement can be placed on furlough again after 10 June 2020 – if you want to be sure of being able to claim under the new scheme for any such employees you may want to put them on furlough again for a minimum of 3 weeks prior to 30 June.
The government has published a fact sheet on the new scheme as well as updated the guidance for employers on the CJRS which I would recommend you read if you have not already done so.
https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
A Summary of the Key Points
What are the changes?
For July, the grant will be available on the same basis as now (the lesser of 80% of pay and £2,500). The government will be reducing its contribution over the remaining months of the scheme, August to October, with a corresponding increase in employer contribution – see table below.
Flexible furloughing
From 1 July 2020, employees will be able to work part-time and be furloughed part-time, provided that they are employees who have already been placed on furlough under the scheme on at least one occasion prior to 10 June 2020.
The part furlough, part work split can follow any pattern that you and the employee agree but the agreement has to be confirmed in writing between you.
You will pay the employee as you normally would for the portion of the employee’s ‘usual hours’ that the employee works in the week in question (including paying tax and NI on those amounts) and you can make a claim under the scheme for the remaining portion of the ‘usual hours’ that the employee does not work (and is on furlough) for that week.
If you have agreed and implemented a pay cut for any employees who have not been furloughed, you may also be able to agree a variation to the contract of furloughed employees so that their part-time rate is reduced accordingly as long as the employee agrees to the change which is likely to be accepted if the alternative could be redundancy.
You will be required to submit data on the ‘usual hours’ an employee would be expected to work in a claim period and actual hours worked. Further details with regards to this are expected to be included in the guidance due to be published on 12 June 2020.
Rotating furlough arrangements
Rotating furlough patterns, for example of 3 weeks furlough followed by a week back at work, will still be possible under the new scheme.
If you have had a core group of employees working throughout and a group continuously furloughed, you may now wish to consider rotation where possible to balance the impact on employees.
Current furlough arrangements
You are not required to bring back employees part-time, for example if there is no work for them to do. You can keep employees at home and not working at all. You will continue to benefit from the CJRS but will need to start making contributions to furlough pay for days not worked.
Making a claim
You will have until 31 July to make any claims in respect of the period to 30 June.
From 1 July, the scheme will only be available to employers that have previously used the scheme in respect of employees they have previously furloughed.
From 1 July, claim periods will no longer be able to overlap months. If you have previously submitted claims with periods that overlapped calendar months, you will no longer be able to do this going forward.
The number of employees you can claim for in any claim period cannot exceed the maximum number you have claimed for under any previous claim under the current CJRS.
You can continue to make claims in anticipation of an imminent payroll run, at the point payroll is run or after payroll has been run.
You will be able to make your first claim under the new scheme from 1 July.
Employer costs
From August 2020, the level of the grant will be slowly reduced to reflect people starting to return to work:
In June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance contributions (ER NICs) and pension contributions for the hours the employee does not work. Employers will have to pay employees for the hours they work.
In August, the government will pay 80% of wages up to a cap of £2,500 and employers will pay ER NICs and pension contributions for the hours the employee does not work.
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 and pension contributions and 10% of wages to make up 80% 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 and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. The cap will be proportional to the hours not worked.
Furlough agreements
Furlough agreements under the original CJRS should have stated that employees were not permitted to carry out any work for you whilst on furlough. You will therefore ned to reach new agreements with employees if bringing them back to work part-time. As a bare minimum, verbal agreements must be reached with employees which are recorded in writing but written agreements for flexible furlough arrangements incorporated into employees’ contracts are strongly recommended.
Further guidance
More detailed guidance on the operation of the new scheme is due to be published on 12 June 2020. If you wish to begin bringing staff back on a part-time basis, you should start to communicate with them regarding this. Any agreement should be documented but be mindful that there may be further requirements once the full guidance is published.
Please note that the information given in this factsheet is for general information only and should not be relied upon without accompanying advice. You are recommended to seek specific advice on individual circumstances. The subject matter within this factsheet is subject to change.
Nicola Mayhew, Evans & Partners HR Consultant
