COVID-19: UK Chancellor Announces Changes To Furlough Scheme – 29th May 2020

By Nic Hart

01.06.2020

In the daily press conference on Friday May 29th 2020, the Chancellor Rishi Sunak, announced further changes to the Coronavirus Job Retention Scheme.

In essence these are as follows:

  • The CJRS will continue until October 2020.
  • Flexi furlough will commence from July 1st 2020.
  • Grants through the CJRS will be tapered from August 2020.
  • The scheme will close to new entrants on 30 June.

Flexi Furlough

This is commencing on July 1st 2020 -a month earlier than previously announced. Employers can decide the hours and shift patterns their employees will work on their return to work, so that they can decide on the best approach for them. Employers will be responsible for paying the employees’ wages while in work.

Further guidance on flexible furloughing and how employers should calculate claims will be published on 12th June 2020, but HMRC has provided some initial advice:

Any working hours arrangement that you agree with your employee must cover at least one week and be confirmed to the employee in writing. When claiming the CJRS grant for furloughed hours, you will need to report and claim for a minimum period of a week. You can choose to make claims for longer periods such as on monthly or two weekly cycles if you prefer. You will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.

If your employees are unable to return to work, or you do not have work for them to do, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules.

Taper of Grants

    • June and July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.
    • August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
    • September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
    • October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.

In order to introduce Flexi Furlough, the present scheme will close to new entrants on 30 June. The last three-week furlough before that point commences on 10th June 2020 and any new entrants must be registered on the HMRC portal by this date at the latest.

HMRC have advised that Employers will have until 31‌‌st July 2020 to make any claims in respect of the period to 30‌‌ June.

As stated, further Guidance on the implementation of flexi furlough will be published on June 12th 2020, which will provide greater detail of how to claim. I will update you on this as soon as we receive the same. Following the Chancellors announcement on May 29th 2020 there have been no further updates to the present GOV.UK CJRS Guidance on how to claim other than a new opening paragraph advising of the upcoming changes.

For More Information

For more information about the Corona Job Retention Scheme, or any general employment matters, please contact Nic Hart or another member of the Duane Morris London Team.