COVID-19 Update: Extension to the Coronavirus Job Retention Scheme - | Hudson McKenzie

COVID-19 Update: Extension to the Coronavirus Job Retention Scheme

On Friday 29th May 2020, the Chancellor Rishi Sunak announced a brand-new set of amendments to the existing Coronavirus Job Retention Scheme (CJRS). These amendments are built on from Sunak’s previous announcement on Tuesday 12th May that the scheme would be extended to October 2020, albeit initially it was only meant to last until July 2020.

Key Details:

  • Furlough Workability:

As of 1st July 2020, employees on furlough can return to work part-time depending on the individual business needs of employers. The government will continue to pay 80% of salaries of employees for the hours they are not working up until August 2020.

Should employers require furloughed employees to return to work, they will now become responsible for remunerating employees for their working hours. In terms of working hours and shift patterns, employers have full flexibility to create a mutually agreed working hours arrangement with employees and decide how long or how little they would like them to work for. This permits employers to make decisions on the future working hours of employees specifically according to their business needs and capabilities, meaning that staff can work for as little or as much as possible.

Any working arrangement employers conduct with their employees must cover a minimum of one week and must be acknowledged and confirmed to the employee in writing.

When making a claim to the CJRS, employers must submit records on the typical hours that each individual employee would typically be expected to work, and the total number of actual hours worked in a claim period. The minimum claim period is one week. 

Should employees not be able to return to work, they can remain on the furlough scheme and continue to claim the grant under the current furlough conditions.

  • Shared Contribution with Employers:

Because the scheme is not financially sustainable for the economy in the long-term, the government have issued a plan to gradually reduce government contributions towards it and encourage employers to contribute towards the 80% of individual employee salaries threshold. This process will occur over the next coming months.

In June and July, the government will continue to pay 80% of salaries up to £2500.00 per month, including employer National Insurance (ER NICs) and pension contributions for the non-working hours of employees. Employers must now pay out for the hours employees work, subject to a mutually agreed working arrangement between employers and employees.

In August, the government will still pay 80% of salaries up to £2500.00 per month, but no longer provide for ER NICs and pension contributions. Employers must now pay for these.

In September, the government will further reduce its monetary contributions by only paying 70% of salaries, up to £2187.50 per month and for the hours an employee does not work. Employers must continue to pay for ER NICs and pension contributions and must now additionally pay 10% of salaries to make up the 80% salary threshold, up to £2500.00.

Finally, in October, the government will only pay 60% of salaries, up to £1875.00 per month and for the hours an employee does not work. Employers continue to pay for ER NICs and pension contributions but must now pay an increased amount, being 20% of salaries to make up the 80% salary threshold up to £2500.00.

Key Dates:

  • 10th June 2020: The final date employers can furlough an employee.
  • 30th June 2020: The scheme will close to all new entrants.
  • 31st June 2020: The final date employers can make a claim in regard to the furlough period up to 30th June 2020.

Should you have any queries regarding the above information or if you are an employer or employee and require legal advice, please contact a legal professional at Hudson McKenzie via email at londoninfo@hudsonmckenzie.com or by telephone +44 (0)20 3318 5794.