Changes to the Coronavirus Job Retention Scheme

Chancellor Rishi Sunak announced a number of changes to the Coronavirus Job Retention Scheme (CJRS) last week. We explain the changes below.

As widely anticipated The Chancellor has announced changes to the CJRS. These changes are intended to continue to support businesses as they slowly emerge from the lockdown and prevent job losses that might be saved in the medium to long term.

Critically, from 1 July, employers will be able to put staff on part-time furlough, claiming the CJRS grant for a portion of their salary. However, they will only be able to claim going forward if they have previously claimed under the pre 1 July scheme (CJRS V1). As the minimum furlough period remains at three weeks any new period of furlough leave must have started by 10 June 2020 to be complete when the current scheme ends on 30 June, to ensure the employee remains eligible for the new furlough scheme from 1st July (CJRS V2).

The proposed changes also introduce a new limit to the number of staff who can be included on a claim. This will be based on the maximum number of staff claimed for, and included in, any single pre 1 July claim.

The Chancellor also confirmed that from 1 August the CJRS grant will no longer cover the cost of employers’ National Insurance or pension contributions with employers expected to cover these costs.

CJRS V2 – What is changing?

Initially the fundamental terms of the scheme remain the same in July, (the lesser of 80% of pay and £2,500) however the Government intends to reduce its contribution on a sliding scale over the remaining months of the scheme (August to October) – with a corresponding increase in the employer’s contribution.

• August – the CJRS will continue to pay 80% of wages
• September – the CJRS will pay 70% of wages, with employers taking on the additional 10%
• October – the CJRS will pay 60% of wages with employers taking on the additional 20%

Whilst the revised scheme has many of the same features as the current one there will be some significant changes intended to encourage those previously furloughed back to work. In summary, these are:

• Employees who were previously furloughed will be able to return to work on a flexible part-time basis.
• For those staff who are furloughed part-time, employers will be required to pay for the cost of the time staff are working. A grant will be available to cover the cost of their furloughed hours.
• Employees must have been furloughed under the CJRS V1 for them to be eligible for a furlough grant under CJRS V2. So, in practice, only employees who have been included in a furlough grant claim made before 1st July 2020 can be furloughed under CJRS V2.

Therefore, if you have a claim under CJRS V1 but have not yet submitted do so now!

If you believe you will need to furlough staff that haven’t yet been furloughed, you have until 10 June before you lose the ability to claim for them in the future.

Further points to note about CJRS V2

• A new minimum reporting period of one week will apply from 1 August 2020. More frequent claims will not be accepted, but the reporting period can be longer.
• From 1 July, claim periods will no longer be able to overlap months, employers who previously submitted claims with periods that overlapped will no longer be able to do this going forward.
• The new calculation will apply from 1 July to factor in the cost of hours worked to hours furloughed ratio.
• Employers can claim the grant for the hours their employees are not working calculated by reference to their usual hours worked in a claim period. Further details will be included in future guidance.
• Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
• For worked hours, employees will be paid by their employer subject to their employment contract and as stated previously employers will be responsible for paying the tax and NICs due on those amounts.
• There will be a new maximum limit to the number of staff who can be included on a claim based on the maximum number of staff included on a single claim under CJRS V1.
• CJRS V2 will end on 31 October 2020.