On Friday 29th May, Chancellor Rishi Sunak unveiled some key details regarding the winding down of the CJRS and the key announcements are summarised below:
Wednesday 10 June 2020 will be the last day that employers can place employees on furlough (that have not been furloughed before). This is so that they will have three weeks furlough leave before the scheme closes for new entrants on 30 June 2020. For employers looking to rotate staff on furlough throughout June and July, the position will need to be reviewed as this means that only employees who have been furloughed before can be furloughed from 1 July 2020.
From 1 July 2020, the ‘flexible furlough’ scheme is being introduced, meaning employees will be able to work part-time and be furloughed part-time (provided that they have been furloughed before). Businesses can decide how that will work in terms of hours and shifts for their staff. When the employee is working, they must be paid their normal wage but can claim for normal working hours not worked under the scheme.
Flexible working can be claimed on a week by week basis for the purposes of the scheme, rather than the current minimum three week period. This doesn’t mean that a separate claim is needed for each individual week worked as it will still be possible to claim as per the monthly payroll period, but the pattern needs to be a weekly working pattern. However, claims can no longer span different months.
Agreement with the employee in writing is recommended although further guidance is due to be published on 12 June 2020.
The scheme is expected to close to new entrants from 1 July 2020.
From 1 August 2020, employers will have to pay employee’s national insurance contributions and pension contributions, and can no longer reclaim them through the CJRS. This is likely to represent 5% of the gross employment costs of the furloughed employee.
From 1 September 2020, the government will only reimburse 70% of salary (up to a maximum of £2,187.50 and Employers will be required to pay at least 10% to keep the employees’ salaries at least at 80%.
From 1 October 2020, the government will only reimburse 60% of salary (up to a maximum of £1,875), and employers will continue having to top up to 80% (or more).
The furlough scheme will close on 31 October 2020 and employers will bear all employee costs again from then.
In light of the announcements, it is important that employers urgently review their current structure and begin planning for these changes. Below are some key points to consider:
On Thursday 24 September the Government announced a new Job Support Scheme commencing on 1 November 2020. For more information, please click here.
For advice about what these changes mean for your business, please contact a member of our Employment team.