All content on this page is correct as of June 16, 2020
On Friday 12 June 2020, further guidance on Coronavirus Job Retention Scheme (CJRS) was published. The guidance sets out in detail the changes being made to the scheme, the majority of which will take effect from 1 July and the rest from August onwards.
From 1 July:
From August employers will be responsible for contributing to employees’ tax and national insurance and, from September, to their wages.
Who remains eligible to be furloughed under the scheme?
The following employees are eligible to be furloughed:
No other employees can be placed on furlough, the last day an employee could have started furlough for the first time was 10 June (except for those returning from family leave).
From 1 July, any sort of working pattern is permitted under the flexible furlough scheme and there is no restriction on the length of time any furlough period must last. However, any furlough period which started before 1 July must still last a minimum of three weeks, even if this three week period ends in July.
Employees will be able to begin “flexible furlough” whereby they work an agreed amount of hours a week and are furloughed for the rest of the week. Employers will need a new written flexible furloughing arrangement with these employees. The agreement will need to cover the hours they will be working and the hours they will be furloughed. Any working arrangement can be agreed with an employee on flexible furlough and this can change from week to week.
Claim period and employees claimed for
Any claim in respect of the period before 30 June must be made by 31 July 2020.
There is no minimum number of weeks or days that an employee must be on furlough. However, any claim made through the portal will need to be for a period of at least one week. Claim periods must start and end within the same calendar month e.g. you can only claim for 1 July to 31 July. The only exception to the seven-day claim is if you are making a claim for a few days at the beginning or end of a month.
Employers cannot claim for more employees than the maximum number they have claimed for under any previous claim ending by 30 June; e.g. if the maximum number of employees you claimed for under the CJRS until end of June was 50, you cannot claim for more than 50 employees from July onward (with the exception of employees returning from maternity or family leave).
From 1 August 2020 employer national insurance and pension contributions will need to be paid by the employer.
From 1 September, the Government will reduce their CJRS contribution to 70% (up to a cap of £2,187.50) and from 1 October, the Government will again reduce their contribution to 60% (up to a cap of £1,875).
The scheme will end on 31 October.
Calculating how many hours can be claimed for and how much to claim
Employers will be able to claim the CJRS grant for the hours their employees are not working. The claim will need to be calculated by reference to employees’ usual working hours in a claim period, compared to number of hours actually worked.
The government has provided guidance on how to calculate usual hours. HMRC has provided examples of how to calculate the usual hours for employees who work variable hours and who are on flexible furlough.
For July and August, the maximum wage amount you can claim for an employee is £2,500 a month, or £576.92 a week (this will change from September with the requirement for employers to also contribute to the scheme). Calculating how much to claim will continue to be relatively straight forward if an employee is furloughed for one week or one month. For any other furlough periods, however, employers will need to determine the daily wage that can be claimed for each employee. The daily maximum wage amounts can be found here.
Further calculations will then need to be done to establish the correct amount to claim for. This is a complex mechanism and usefully the government has produced an online calculator along with example scenarios are available to help employers work out how much can be claimed. Another example can be found here.
Record keeping requirements
Employers must keep a copy of all records in regards to claims made under the CJRS for 6 years, including:
This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.
All content on this page is correct as of June 16, 2020.