On Friday 29 May 2020 the Chancellor announced that some of the changes to the scheme will apply a month earlier than expected.
From 1 July 2020 the scheme will allow part-time working, but importantly staff must have been furloughed by 10 June 2020 to be eligible as employers will only be able to claim going forward if they have previously claimed under the pre-1 July scheme.
The cut-off date is 10 June 2020 as a result of the three-week minimum furlough requirement under the current rules. Due to this it follows that any new period of furlough leave must have started by 10 June 2020 to be complete when the current scheme ends on 30 June 2020 and so ensure the employee remains eligible from 1 July 2020.
Employers will have until 31st July to make any claims in respect of the period
to 30 June 2020.
The proposed changes also introduce a new limit to the number of staff who can be included on a claim. This will be based on the maximum staff ever included in any single pre 1 July claim.
Gradually more of the cost of furloughing will be passed onto employers.
For July 2020 the grant will be available on the same basis as now (the lesser of 80% of pay and £2,500).
The intention is that the government will reduce its contribution over the remaining months of the scheme – August 2020 to October 2020– with a corresponding increase in the employer contribution.
- August 2020- the CJRS will continue to pay 80% of wages but the CJRS grant will no longer cover the cost of employers’ National Insurance nor pension contributions with employers expected to cover the costs.
- September 2020- the CJRS will pay 70% of wages while employers will take on the other 10%.
- October 2020 – the CJRS will pay 60% of wages while employers will take on the other 20%
Throughout the duration of the furlough scheme it is important to remember that the employee will continue to receive their salary entitlement in full, as set out by the terms of their employment contract. The CJRS is a grant paid to the employer, and it is this grant which is now being scaled back, the calculation being based on the salary paid for any period while the employee is being furloughed.
The revised scheme has many of the same features as the current scheme which runs between 1 March and 30 June 2020, but there will be some significant changes intended to encourage those previously furloughed back to work.
In summary, these are the changes:
- Employees who were previously furloughed will be able to return to work on a flexible part-time basis.
- To be eligible for the grant, employers must agree with their employee any new flexible furloughing arrangement and confirm that agreement in writing.
- For those staff who are furloughed part-time, employers will be required to pay for the cost of the time staff are working. A grant will be available for the cost of their furloughed hours.
- A new minimum reporting period of one week will apply from 1 August 2020. More frequent claims will not be accepted, but the reporting period can be longer.
- From 1 July 2020, 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
- The grant will be based on the same premise as now, so the employee must be paid the lesser of 80% of reference salary and £2,500 per month. The government contribution to the 80% of reference salary is being reduced as the scheme progresses.
- The new calculation will apply from 1 July 2020 to factor in the cost of hours worked to hours furloughed ratio.
- Employers can claim the grant for the hours their employees are not working calculated by reference to their usual hours worked in a claim period. Further details will be included in future guidance.
- Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
- For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts
- Employers can continue to make claims in anticipation of an imminent payroll run, at the point payroll is run or after payroll has been run.
- Employers will be able to make their first claim under the new scheme from 1 July.
- CJRS V2 will end on 31 October 2020.