COVID-19 Advice for business - CJRS update

Last week the Chancellor announced changes to the Coronavirus Job Retention Scheme (CJRS) which will come into effect on 1 July. More detail on these changes will be published on 12 June. However, we are strongly recommending that you read through these changes now because you may need to take action before 10 June in order not to miss out on furloughing some staff in the future.

The new rules are very different in many ways. It is almost like an entirely new scheme. It is helpful to think about CJRS having two versions – version one being the scheme as it was up to 30 June and version two, the scheme after 30 June. 

Shaw Gibbs are here to support you through this. If you have any questions about this please do get in touch this week so we can help you make decisions in time for the introduction of the changes.

Key Points

• The current arrangements will continue to apply until 30 June 2020 (what we are calling version one)

• From 30 June the CJRS is closed to new entrants. From this point onward, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June. In other words, from 30 June, you can only furlough an employee who you furloughed under version one of the scheme. Because they must have been furloughed for three weeks before 30 June, crucially, the latest you can start their furlough period (if you have not furloughed them already) is 10 June. If you furlough them on 10 June, they will have completed 3 weeks by 30 June and so you would be able to furlough them after 30 June if you needed to. Employers will have until 31 July to make any claims in respect of the period to 30^th June. Therefore, please look at your workforce this week and think through who you might wish to furlough after 30 June.

• Flexible Furloughing

• From 1 July 2020, employees will be able to work part-time and be on furlough part-time. The employer will have to pay in full for any hours worked (including NI and pension contributions) and the government will reimburse a maximum of 80% of wages (capped at £2,500 per month)
• When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of a week. This is a minimum period and those making claims for longer periods such as those on monthly or two weekly cycles will be able to do so
• Therefore, we believe this implies from 1st July the minimum furlough leave period will be reduced from 3 weeks to 1 week but we are awaiting confirmation on this on 12 June when the Government is expected to announce further guidance on flexible furloughing and how employers should calculate claims.

• From 1 July, claim periods will no longer be able to overlap months, employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this going forward. This is necessary to reflect the forthcoming changes to the scheme

• From 1 August 2020, the government will reimburse a maximum of 80% of wages (capped at £2,500 per month) but employers will have to pay NI and pension contributions on that 80% figure

• From 1 September 2020, the government will reimburse a maximum of 70% of wages (capped at £2,187.50 per month) for the hours the employee does not work. Employers will have to pay a minimum of 10% of wages plus NI and pension contributions to make the wages up to at least 80% (capped at £2,500 per month).

• From 1 October 2020, the government will reimburse 60% of wages (capped at £1,875 per month) for the hours the employee does not work. Employers will have to pay a minimum of 20% of wages plus NI and pension contributions to make the wages up to at least 80% (capped at £2,500 per month)

• The CJRS will close on 31 October 2020

• As with the current version of the CJRS, for each separate period of furlough leave, employees must be provided with a furlough leave agreement in writing (which they should sign). Shaw Gibbs can provide you with an agreement template and we can help you complete it

• If you want to do flexible furloughing, to be eligible for the grant, employers must agree with their employee any new flexible furloughing arrangement and confirm that agreement in writing. Shaw Gibbs can provide you with a template for this after 12 June when we will have received further details on version two of the scheme from the Government

• Depending on the wording of your existing furlough leave agreements, you may need to amend this wording / write to your furloughed employees to cover the changes happening to furlough pay from 1 August.