Today, in line with the Chancellor’s 29 May 2020 announcement, HMRC has finally published new guidance (8 documents in total) on the next phase of the Coronavirus Job Retention Scheme (CJRS). This will be welcome news to employers who can now start to move further forward with their plans for economic recovery and assess the impact of the scheme changes on their workforce.
As expected, the guidance published today provides further details of how employers can ‘partially furlough’ their employees from 1 July 2020 and explains in more detail the financial implications this has for employers.
- Employees can continue to be fully furloughed until 31 October 2020. However, from 1 July 2020, employers will be able to bring an employee back to work part-time (for any amount of time and any work pattern) whilst keeping the employee on furlough for the remainder of their normal working hours. Employers will still be eligible to claim a grant under the CJRS in respect of 80% of the employees’ salary costs (capped at £2,500 per month) for the time the employees remain on furlough, plus the employer NICs on that pay and the mandatory pension contributions. Employers will otherwise pay employees as normal for the hours they actually work.
- From 1 August 2020, however, employers will be required to pay the employer NICs and mandatory pension contributions payable on the employees’ furlough pay.
- From 1 September 2020, the financial liabilities on employers will increase, with employers being both required to pay the employer NICs and mandatory pension contributions on the employees’ furlough pay and also contribute 10% towards the employees’ salary costs. The government will contribute 70%, capped at £2,187.50 per month.
- From 1 October 2020, the employer contribution increases to 20%, with the government contributing 60%, capped at £1,875 per month.
- Employers will need to carefully follow the guidance to ensure they are calculating their claims correctly and at all times, employees will be entitled to receive 80% of their salary, capped at £2,500 per month.
- The CJRS will close completely on 31 October 2020, meaning that employers will no longer be able to furlough employees whilst still being eligible to recoup salary costs.
- In order to partially furlough an employee, employers will be required to agree the new arrangements with the employee and confirm that agreement to them in writing (or must have reached collective agreement with a trade union). A written record of the agreement must be kept for 5 years. Employees do not have to provide a written response.
- Employers will be required to keep records of how many hours the employees work and the number of hours for which they are furloughed.
- During any period for which an employee is recorded as being on furlough, the employee cannot do any work for the employer which makes money for, or provides services to, the business, or one connected to it. They can, however, undertake training, or volunteer or work for another employer or organisation.
- Employers will not be able to partially furlough any employees who were not previously furloughed for at least 3 consecutive weeks at any time between 1 March and 30 June 2020. There are exceptions for employees returning from statutory parental leave who can be furloughed for the first time after 10 June 2020, provided the employer has previously made a claim under the CJRS in respect of other employees and the returning employee was on the employer’s payroll (with an RTI submission made to HMRC) on or before 19 March 2020.
- From 1 July 2020, there is no minimum furlough period and an agreed flexible furlough arrangement can last for any amount of time. However, the period claimed for must be for a minimum period of 7 calendar days. A flexible furlough arrangement can be entered into more than once.
- The number of employees claimed for in a single claim period starting 1 July 2020, cannot exceed the maximum number of employees an employer claimed for under any claim ending by 30 June 2020 (although eligible employees returning from statutory parental leave can be added on top).
- The last date on which claims can be submitted for periods ending on or before 30 June 2020 is 31 July 2020.
Employers will need to take stock of these changes and determine the impact on their workforce. For some, however, the ongoing impact of coronavirus will warrant a look further ahead and unfortunately may mean that now will also be the time to consider whether redundancies may be on the horizon. Employers who are significantly impacted will have to keep a close eye on collective consultation timeframes if consultation is to be carried out within the currency of the CJRS.