Connie Cliff
PSL Principal Associate
Article
13
From 1 July 2020 the Coronavirus Job Retention Scheme (CJRS) is changing. Businesses will be given the flexibility to bring furloughed employees back to work part time and still claim under the CJRS.
But, for claims from 1 July onwards, CJRS will only be available to employers that have already used the scheme and only in respect of employees they have previously furloughed for the current minimum of three weeks. The scheme in its current form will close on 30 June, with the last three-week furloughs before that point having to have started on 10 June at the latest.
Unfortunately the HMRC Guidance on 'flexible furlough' is not being published until 12 June, two days after that crucial 10 June final date. So employers only have a week to decide whether to furlough employees for the first time to be eligible to use the new CJRS from 1 July onwards for those employees.
The Chancellor's Statement on 29 May sets out the new tapering rules but gives very little detail of the rules that will apply to flexible furloughing, see our earlier alert, COVID 19: CJRS mark 2 - Chancellor announces next steps.
In addition to the Statement, the Government has issued a Factsheet for SEISS and CJRS schemes. While we await the HMRC 12 June guidance, the Factsheet does tell us that from 1 July:
While the flexibility to bring staff back part time without being debarred from the CJRS funding is welcome, the way it is being introduced does pose challenges for employers. Planning without the detailed guidance is difficult and the choices employers will need to make in terms of which staff to bring back and for how long, involve balancing a number of factors such as practicability, affordability and employee relations.
Employer A furloughed all its staff in March who have remained on furlough since then.
From 1 July Employer A can:
Employer B has not yet furloughed any staff, instead they put all staff on short time working of 50% of normal hours and pay.
From 1 July:
In March, Employer C divided its 100 strong workforce into two groups of 50 each, rotating employees in Group X with Employees in Group Y on four weekly furlough. Can Employer C now put all workers on flexible furlough so everyone works half a week?
Highly unlikely. 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 (pre-1 July) claim. So if the maximum number claimed for under a pre-1 July claim period was 50, that is the maximum number it can claim for a claim period post 1 July. Instead:
Employee D normally works full time five days a week. In March, all employees agreed contractual variations to reduce their hours by 20% to four days a week, with the possibility of also going on furlough at some point. Employee D furloughs for at least three weeks in May and returns to work after that furlough period to work four days a week.
If Employee D is placed on flexible furlough on 1 July to only work two days a week for which the employer pays them two days' full pay, is the 80% grant under the scheme based on three days not working or only two days not working?
The factsheet states "the cap will be proportional to the hours not worked" but is this based on pre-19 March hours or on any subsequent contractual variation of hours? How you determine hours not worked in a situation where the employer has agreed short time working with the option for periods of furlough is currently unclear.
All employees normally work full-time five days a week. In March, all employees agreed contractual variations to reduce their hours by 20% with the possibility of also going on furlough. The employer divides the employees into two groups of rotating employees, those in Group X rotating with Employees in Group Y on three weekly furlough with staff working a four day week when not on furlough.
Can the employer now put all employees on flexible furlough so everyone works two days a week?
Again, highly unlikely. See example C above.
10 June 2020
Any employees being furloughed for the first time must be placed on furlough by this date for a minimum period of three weeks.
12 June 2020
Further guidance to be published
30 June 2020
CJRS closed to new entrants
1 July 2020
The new flexible furlough scheme starts for employers who have used CJRS already but only in respect of employees previously furloughed. From 1 July, employees can be partly furloughed and partly working and the grant can be claimed for the hours not worked.
31 July 2020
Final date for employers to make claims for the period to 30 June 2020
1 August 2020
Level of the grant employers can claim under the CJRS will progressively reduce. The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions
1 September 2020
The government will pay 70% of wages up to a cap of £2,190. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.
1 October 2020
The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.
31 October 2020
CJRS closes
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