On Friday 29 May 2020, the Chancellor published further details regarding the second phase of the Coronavirus Job Retention Scheme, which has been extended until the end of October 2020.
While it will operate in its current format until 30 June 2020, employers should be aware of the key changes affecting the Scheme from 1 July. From this date, employees will be permitted to return in a limited, part-time capacity although the government has yet to publish detailed guidance setting out the practical arrangements for bringing furloughed employees back to work.
The amount of reimbursement available under the Scheme will also start to reduce from 1 August 2020 with employers being asked to contribute more each month to their employee wage costs. The Chancellor’s announcement, published here, confirms the following changes and when they will take effect:
- Until 30 June 2020: The Scheme will operate as normal and employers can continue to claim for 80% of eligible employees’ wages up to £2500, along with employer pension and national insurance contributions.
- From 1 July 2020: Only employees who had been on furlough for a full 3 week period before 30 June 2020 can be furloughed from 1 July. The government has yet to confirm the practical details of how this will work, for example, whether those furloughed on 30 June 2020 can continue to rotate on and off furlough in July or the conditions for bringing staff back part-time. What has been clarified is that employees would need to be furloughed by 10 June 2020 to ensure they have completed the required 3-week period before July. For these individuals, employers can continue to claim 80% wages up to £2500, NI and pension contributions until 31 July 2020.
- From August 2020: The amount of reimbursement available under the CJRS will remain at 80% of wages up to £2500. The key change is that NI and pension contributions will no longer be reimbursed and will need to be met by employers.
- From September 2020: The amount of reimbursement employers can claim through the CJRS will be reduced to 70% of wages up to a maximum of £2187.50. Employers will be required to top this to 80%, up to the £2500 cap. Employers will continue to pay NI and pension contributions themselves
- From October 2020: The amount of reimbursement will drop further to 60% of wages up to a cap of £1875. Again, employers will be required to top this up to 80% up to the cap of £2500, and pay NI and pension contributions.
A further publication from HMRC setting out more detailed guidance is expected on 12 June 2020.
Insight from Noele McClelland, Employment Law Partner. For more information contact Noele or any member of the Employment team on 03330 430350.
