The Future of the Coronavirus Job Retention Scheme
The Government announced widely anticipated reforms to the CJRS on Friday 29 May 2020. Details of the broad outline of the scheme have been widely reported in the media and, as before, the fine detail of the updated scheme will develop over the next few weeks. Mindful that the new scheme will take effect from 1 August 2020, but with significant changes from 1 July 2020, we set out below some guidance for employers as to what preparatory action they should consider taking in the short term
Are there any urgent deadlines which employers need to be aware of?
Employers will only be able to claim a grant under the CJRS going forward if they had already made a claim under the pre 1 July scheme. This will be the new maximum limit on the number of staff who can be included on a claim. As there is a minimum 3 weeks furlough requirement under the current CJRS , the current rules mean that the last day that employers can place employee on furlough is 10 June 2020. Employers who have yet to submit claims under the CJRS should do so as a matter of urgency.
The original scheme prohibited employees from working for their employer whilst furloughed – when will this change?
In practice the distinction between working and say personal training and development has proved controversial in some workplaces. These concerns should abate as the concept of “flexible furlough” is being introduced from 1 July 2020. This means that staff who were previously furloughed will be able to return to work on a flexible part time basis. Employees will be able to work part time and be furloughed part time. Employers will decide the time split. Employers will be required to pay for the costs of the time staff are working . A grant from the CJRS will be available for the cost of their furloughed hours.
Are there any other costs employers should be aware of ?
The purpose of these changes is to shift the burden from the tax payer onto employers as lockdown measures end ? Employers should be aware of the following changes which are introduced gradually over a several months as follows:
1 August 2020 Employers will have to pay employee’s national insurance contributions and pension contributions which will be irrecoverable under the CJRS.
1 September 2020 The Government will only reimburse 70% of salary (up to a maximum of £2190). Employers are required to top up to 80% (up to a maximum of £2500) or such other amount as has been agreed between the employer and employee.
1 October 2020 The Government will only reimburse 60% of salary (up to maximum of £1875). Employers will continue having to top up to 80% (up to a maximum of £2500) or more as agreed.
When will the scheme close ?
31 October 2020. No extensions are anticipated.
What is the most important action employers should take now ?
The top priority must be to review the original furlough letters. Many included a review date of 31 May 2020. Employers need to check as a minimum that these reviews have taken place and communicated to furloughed staff. New or revised furlough letters may be required to deal with pending changes to the CJRS such as the introduction of flexible furlough from 1 July and the circumstances where an employee may be required to return to work. Such variations will require employee’s consent.
Any other urgent actions for employers?
* Review accrued holiday entitlement and decide whether employees are to be instructed to take holiday during furlough in whole or in part?
* Review affordability of “top ups” to furlough and , if necessary, seek to implement revised terms.
* Consider of furlough on redundancy proposals and whether notice is to be worked on furlough or paid in lieu.
If you have any further questions on any of the issues raised above, please contact our employment team at email@example.com for any further advice. This general guidance is correct as at 1 June 2020 but may be subject to change. We strongly recommend that specific advice is sought as needed.