As anticipated, changes to the CJRS scheme were recently announced and take effect from 1 July. The Chancellor has brought forward by a month the ability to operate a flexible furlough so that from 1 July employees can be brought back to work agreed hours/shifts/days and the employer will only have to pay for those hours worked and claim for the balance.
There is effectively going to be an ‘old’ scheme up to 30 June 2020 and a ‘new scheme’ from 1 July -31 October 2020. This is what we know so far:
A) Deadlines
The furlough scheme will be closed to new entrants from 30 June 2020 and employers will only be able to claim for furloughed employees who have been furloughed for a minimum 3-week period prior to that date. This means that the last date you can furlough a previously unfurloughed employee to qualify to claim under the new scheme is 10 June 2020.
Claims under the old scheme must be made by 31 July 2020. HMRC says that 40% of employers have not claimed for employer’s NI and 3% pension contributions. The NI might be because the employer gets Employment Allowance for that employee but if you are an employer who is entitled to claim for these two and have not then do so by 31 July 2020.
Currently the scheme closes completely on 31 October 2020.
B) Changes to what an employer has to pay
- 1 June – 31 July 2020
The Government’s contribution to the wages of furloughed employees under CJRS will continue unchanged, i.e. with HMRC paying 80% of wages up to a cap of £2,500 per month with no contributions from the employer and HMRC reimbursing employer NIC’s and minimum employer pension contributions.
- 1-31 August 2020
HMRC will reimburse the lower of 80% of wages or £2,500 per month but employers will not be able to reclaim employer NICs and minimum pension contributions.
- 1-30 September 2020
HMRC will pay 70% of wages up to a cap of £2,187.50 per month with employers being required to pay 10% of wages to make up 80% total up to a cap of £2,500 and employers will not be able to reclaim employer’s NICs and minimum pension contributions.
- 1-31 October 2020
HMRC will pay 60% of wages up to a cap of £1,875 per month with employers being required to pay 20% of wages to make up 80% total up to a cap of £2,500 and employers will not be able to reclaim employer’s NICs and minimum pension contributions.
- On 31 October 2020, the CJRS will close altogether.
As with the previous scheme, the employer can choose to top up the payment if they want to.
C) ‘Flexible furlough’ – allowing an employee to do some work for you
This change comes into effect from 1 July 2020 and is only in respect of employees furloughed on that date and who have been furloughed for a minimum of 3 weeks prior to 30 June. It is important to note that the employee must already be on furlough as they must be ‘brought back’ to work.
From 1 July, the HMRC factsheet says employers can bring back to work employees from furlough, for any amount of time and any shift pattern, while still being able to claim CJRS grant for those contracted hours/days that they are not required to work. So, employers will be allowed to furlough employees for only part of their working week, for example working two days a week and on furlough for the other three days.
A successful claim relies on them being furloughed for 3 weeks or more prior to 30 June 2020
For worked hours, employees will be paid by their employer at their normal full rate of pay in accordance with their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.
When making a claim, employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
Source: HM Treasury
D) The small print
The number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim under the current CJRS.