Following the Chancellor’s announcement on 12 May regarding the extension of the CJRS through to 31 October 2020, we now have further details about how employers will be expected to “share the cost” of this scheme from 1 August and how the flexibility promised in the original announcement will work in practice.
What does the term ‘flexible furlough’ used by the government mean?
From 1 July 2020, employers will have the flexibility to bring previously furloughed employees back to work part-time. The government will continue to pay 80% of wages for any of their normal hours which they do not work until the end of August.
The introduction of ‘flexible furlough’ effectively means that employees can work as required to fulfil the needs of the business with no minimum or maximum limits. The Chancellor provided an example of this; if an employee who normally works a 5 day week is brought back to work for two days per week, this would result in the employer paying their salary for two days and the CJRS would cover the other three days (subject to the usual caps- see below).
From 1 August to 31 October, how will the cost of the scheme be shared with employers?
The support employers will receive from the government will begin to be tapered away and employers who continue to take advantage of the CJRS will be required to contribute at certain levels:
- In June and July, there is no change; the scheme will continue as before with full support from the government (up to 80% of salary, subject to a cap of £2,500, plus employer’s national insurance and auto-enrolment pension contributions) with no compulsory employer contribution;
- From 1 August, employers will pay employer’s national insurance and auto-enrolment pension contributions for furloughed employees;
- From 1 September, employers will pay 10% of furlough salary, with the government contributing the remaining 70% (up to a cap of £2,187.50);
- From 1 October, employers will pay 20% of furlough salary, with the government contributing the remaining 60% (up to a cap of £1,875).
When will the CJRS officially close?
As previously announced, the CJRS is due to come to an end on 31 October 2020. However, in last week’s announcements, the Chancellor indicated that the CJRS will close to new entrants from 30 June 2020.
From 1 July, employers will only be able to furlough employees who have already been furloughed for a period of at least three weeks prior to 30 June 2020.
This means that an employee will need to be on furlough for the first time by 10 June 2020 to meet the minimum three-week period.
The government has released a factsheet which provides full details on recent announcements. Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June.
If you have any questions on the recent announcements, or indeed on any aspect of the Coronavirus Job Retention Scheme, please do get in touch and speak with your usual contact at RG.