The government has proposed a flexible way out of furlough for the millions affected. As of the 14th June, approximately 9.1 million jobs from 1.1 million employers were furloughed in the UK. However, the sheer cost of the Coronavirus Job Retention Scheme (CJRS) means it will have to change in the coming months.
The CJRS, introduced in response to the economic damage caused by the Coronavirus (COVID-19) pandemic, covers 80 percent of an employees’ usual monthly wage, up to £2500 a month. The number of people and employers reliant on the scheme means that the government is estimated to have spent £20.8 billion so far. The figure expected to rise to £80 billion by the time the program stops in October 2020.
An abrupt end would likely produce the same ‘cliff-edge’ redundancy situation that the CJRS was introduced to prevent. Instead, a gradual easing of the scheme has been proposed, with changes being introduced across the summer months for those furloughed 100% of the time:
- July – no changes to scheme
- August – Employers can no longer reclaim for ERNI & ER Pensions. Employers funding of employers’ NICs and pension contributions applies to both the hours not worked and hours worked if any
- September – The percentage of furloughed wages an employer may reclaim reduces from 80% to 70% and employers are expected to contribute the 10% difference themselves
- October – The percentage of furloughed wages an employer may reclaim further reduces from 70% to 60% and they will now be expected to contribute 20% to make up the 80% total
This provides a broad framework and direction of travel. However, in the short term, the CJRS will also become more flexible to allow businesses to begin to return to normality at a pace that suits them. It is hoped that the option of a gradual return to work will help the economy begin to recover whilst still buying more time for businesses to avoid redundancies.
Employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern. They will still be able to claim the Coronavirus Job Retention Scheme grant for their normal hours not worked. However, employers will not be able to increase the number of employees on furlough above the maximum number covered by any one claim made prior to the 1st of July – the high-watermark number.
Exceptions to this high-watermark rule include employees returning from family leave and armed forces reservists. These employees are deemed to increase the high-watermark number and can still be furloughed after the cut-off date, provided they were on the employer’s payroll on or before 19 March 2020 and commenced the relevant period leave before 10 June 2020 and that the employer had made a qualifying claim under the CJRS in relation to other employees prior to 30 June 2020.
When claiming the grant for furloughed hours, employers will need to report and claim for a minimum period of a week.
The scheme will close to new entrants from 30 June
- Employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June
- The final date by which an employer needs to agree with their employee and ensure they place them on furlough is 10 June
- N.B. Parents on statutory maternity and paternity leave who return to work in the coming months will be eligible for furlough scheme even after 10 June cut-off date
Employers will have until 31st July to make any claims in respect of the period to 30 June. All furlough agreements between employer and employee (or collective agreements between employer and a trade union) must be made before the beginning of the relevant furlough period and made or confirmed in writing.
If you have any questions regarding the CJRS or furlough or their impact on your business, please feel free to contact email@example.com.