Last month, the Chancellor announced more details on the expected changes to the coronavirus job retention scheme (“CJRS”) and also announced that the flexibility element would begin from 1 July 2020, and not 1 August 2020 as announced previously.

Part-time furloughing

From 1 July 2020, businesses using the scheme will have the flexibility to bring previously furloughed employees back to work part time – with the Government continuing to pay 80 per cent of wages for any of their normal hours they do not work up until the end of August. This flexibility comes a month earlier than previously announced and is aimed at helping people get back to work.

Employers will decide the hours and shift patterns their employees will work on their return, and will be responsible for paying their wages in full while working. This means that employees can work as much or as little as the business needs, with no minimum time that they must furlough staff for.

Any working hours arrangement agreed between a business and their employee must cover at least one week and be confirmed to the employee in writing.

When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of a week. They can choose to make claims for longer periods such as on monthly or two weekly cycles if preferred.

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

From August, the CJRS grant provided through the scheme will be slowly tapered. The key points for the next few months are as follows:-

• from 1 July 2020, the scheme will be made more flexible to enable employers to bring previously furloughed employees back part time and still receive a grant for the time when they are not working;
• there is no longer a minimum furlough period;
• from 1 August 2020, employers will have to start contributing to the wage costs of paying their furloughed staff. This employer contribution will gradually increase in September and October;
• the scheme will close to new entrants from 30 June. The only exceptions to this at present are for claims for employees returning to work after a period of parental leave or military reservists, who may not have been furloughed previously;
• in June and July, the Government will continue to pay 80 per cent of wages up to a cap of £2,500 in addition to employer National Insurance (ER NICs) and pension contributions for the hours the employee doesn’t work and is on furlough. Employers will have to pay employees in the usual way for the hours they work;
• in August, the Government will continue to pay 80 per cent of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions – for the average claim, this represents 5 per cent of the gross employment costs that they would have incurred if the employee had not been furloughed;
• in September, the Government will pay 70 per cent of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10 per cent of wages to make up 80 per cent of the total up to a cap of £2,500;
• in the final month of the scheme in October, the government will pay 60 per cent of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20 per cent of wages to make up 80 per cent of the total up to a cap of £2,500;
• the cap on the furlough grant will be proportional to the hours not worked;
• for periods starting on or after 1 July, the maximum number of employees you can claim for in any period cannot be higher than the maximum number you have claimed for in a previous period. For example, if your highest single claim for periods up to 30 June was for 100 people, you can’t claim for more than this number in later periods;
• furlough claims will require more detail including the usual hours worked which will be based on calendar days. The hours on furlough will be the claimable amount;
• furlough claims must be for at least a week and will not be able to extend across a month end – this is due to the changes being introduced from 1 July, 1 August, 1 September, and 1 October;
• 30 November 2020 will be the final date for submitting claims under the flexible rules applicable from 1 July 2020;
• employers must still agree working arrangements with furloughed employees from 1 July 2020 onwards – employment law requirements must still be satisfied;
• claims under the flexible scheme will open from 1 July 2020;
• claims will again be made using the online portal; agents will continue to be able to submit claims for clients.

According to the guidance provided by HMRC, many smaller employers have some or all of their ER NICs bill covered by the Employment Allowance so will not be significantly impacted by that part of the tapering of the Government contribution.

Around a quarter of CJRS monthly claims relate to wages that are below the threshold where ER NICs and auto enrolment pension contributions are due, hence no employer contribution will be required for these furloughed employees in August.

Important dates

It’s important to note that the scheme will close to new entrants from 30 June 2020. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June.

This means that the final date by which an employer can furlough an employee for the first time was 10 June in order that the three-week furlough period be completed by 30 June. Employers have until 31 July 2020 to make any claims in respect of the period to 30 June 2020.