Latest Update – 13th July 2020
This article will provide an updated summary of the latest CJRS guidance following the Chancellor’s Summer Statement on 8th July 2020 by which there are three key developments:
- Flexible Furlough
- Employer Contributions to Furlough Pay
- Job Retention Bonus
Flexible Furlough
On 29th May 2020 the Chancellor announced the introduction of ‘flexible furlough’. Coming into effect as of 1st July, employers will be able to bring furloughed employees back to work on a part time basis. The Scheme will allow employers to decide the shifts and hours of their employees, with the government continuing to cover the 80% of the hours which they do not work. The scheme will run until 31st October 2020.
The Scheme is open to employees who were part of a HMRC claim under the old scheme. This also includes employees currently on furlough leave who will remain until the new scheme begins, and those who have since returned to work. However, it should be noted that no new entrants that have not completed a full three weeks of furlough (between 1st March and 30th June) can be admitted to the Scheme (except employees returning from statutory maternity leave).
Employer Contributions to Furlough Pay
It has been confirmed that government contribution rate towards furloughed employees will be changing. From 1st August 2020 employers will have to pay contributions to Furlough pay. In particular, employers will be expected to pay NI contributions on furlough pay or salary. The employee will remain entitled to receive the same amount of pay throughout. As of September, the minimum contribution expected of employers will be at least 10%, with the government continuing to pay 70%. This will increase to 20% in October, with the government covering 60% so that the cap on the grant paid will have reduced before the end of the Scheme.
Job Retention Bonus
The Chancellor announced on 8th July 2020 that the government will introduce a one-off £1,000 payment to UK employers for each furloughed employee who remains continuously employed through to the end of January 2021.
Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021. Payments will be made from February 2021.
The aim of the bonus being to avoid the need for employers to make redundancies following the end of the Scheme in October. With little information is available regarding the bonus, it is unclear just how effective this bonus will prove for employers.
Further detail about the scheme will be announced by the end of July.
For more information on the evolution of the furlough scheme you can contact our specialist employment law team on 03300 585 222 (24/7), by e-mail at [email protected] and through our website at www.btmk.co.uk (live chat also available).
