The Coronavirus Job Retention Scheme (CJRS) is changing from the 1st July. The new CJRS has become affectionately known as the Flexible Furlough Scheme (FFS).
This is a long message but if you intend to furlough your staff beyond the 1st July 2020 you need to read it and understand it.
We’ve resisted providing an update until now, to avoid inevitable confusion with the established scheme that runs to 30th June 2020.
So, what’s changing from 1st July 2020? Here are some of the facts:
- Firstly, it is imperative that, from 1st July 2020, you keep careful records of the hours your staff actually work and the hours they are being flexibly furloughed. We will need this information if we are processing payroll on your behalf.
- The CJRS finishes completely on 31st October 2020.
- From 1st July, employers can bring back furloughed staff for any amount of time, on any shift pattern but still claim an 80% CJRS grant for furloughed hours as well as claim a grant for employer’s NIC and Pension Contributions attributable to furlough hours.
- From 1st August, the CJRS grant will still pay 80% of the furloughed wages of employees but the employer’s NIC and Pension Contributions, for the whole of the employee’s pay, will have to be paid by the employer. The furlough cap remains at £2,500 per employee for August.
- From 1st September the government will pay 70% of furloughed employee wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages, up to a cap of £2,500, for time they are furloughed.
- From 1st October the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
- The last day you can claim a CJRS grant for claims period up to 30th June 2020 is 31st July 2020 – after this date, the grant for June and prior is lost.
- The CJRS claims are going to be complex because separate claims will need to be submitted, to cover the days in June, separately, and the days in July that you want to claim for, even if employees are furloughed continuously. This may mean that your claim periods will quite possibly differ from the pay periods you use.
- The CJRS does allow for grant claims to be made in advance of the pay date – Asquith & Co have been doing this wherever possible. If flexible furlough is to be utilised, care will need to be taken because a grant claim cannot really be made until you are sure what hours an employee has or will actually work because only then will the remaining furlough grant amount be calculable.
Any hours worked by the employee, from 1st July, must be paid at the full rate and will be at 100% cost to the employer.
So while furloughed employees will continue to be paid at the rate they are used to while furloughed the government support is gradually reducing so furlough employees will start to cost the employer more money each month.
This is complicated: here is the government’s own table that summarises the changes:
|Government contribution: employer NICs and pension contributions||Yes||No||No||No|
|Government contribution: wages||80% up to £2,500||80% up to £2,500||70% up to £2,187.50||60% up to £1,875|
|Employer contribution: employer NICs and pension contributions||No||Yes||Yes||Yes|
|Employer contribution: wages||–||–||10% up to £312.50||20% up to £625|
|Employee receives||80% up to £2,500 per month||80% up to £2,500 per month||80% up to £2,500 per month||80% up to £2,500 per month|
All furlough arrangements have to be agreed in writing with your employees, which brings with it a whole raft of challenges that are beyond the scope of this message.
A note of caution. We have heard, in the news and some gossip, that some unscrupulous employers are furloughing staff, but still requiring them to work. We flagged this up early on as something that we are sure will be treated as fraud, if discovered. HMRC have already set up a whistle-blower’s hotline, so they are clearly interested in the possibility that this is happening. We feel certain that defrauding the CJRS will be a hot target for the cash-starved government, in due course, so please be very careful to properly document your CJRS grant claims, and retain as much paperwork and evidence as you can to support your grant claims.
For more information on this or anything else relating to Covid -19 and what you are eligible for please visit Asquith & Co website