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Furlough scheme June to October – the key changes

Another weekend, another set of changes to the government’s Coronavirus Job Retention Scheme to digest! Clayton & Brewill explains how the furlough scheme will change over the next few months and what employers need to know.

The government introduced the Coronavirus Job Retention Scheme (CJRS) in March and it has provided a real financial lifeline for businesses hit by the pandemic.  The scheme has allowed employers to claim for 80% of furloughed employees’ usual monthly wage costs, up to a total of £2,500 a month.

The CJRS was initially set to run until the end of May, before it was extended to the end of June and then, most recently, to the end of October.

On Friday 29 May, the chancellor Rishi Sunak set out how the CJRS will change over the next few months to allow “those who are able to return to work to do so”.  The changes include flexible furlough, increases to employer contributions and a gradual tapering off of government support.

A key point to note is the deadline of 10^th June for putting any additional employees onto furlough.

Here are some of the other main changes to the CJRS:

1. The furlough scheme will close to new entrants on 30^th. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30th June. This means that the final date by which an employer can furlough an employee for the first time will be 10th June, in order for the three-week period to be completed.

2. From 1^st July, businesses can bring furloughed workers back on a part-time basis. The business will pay for the hours worked and can claim the under the CJRS for the remaining hours on the existing 80% basis. It will be down to individual businesses to decide what part-time means, they will be able to set the hours and/or shift patterns that staff work.

3. From 1^st August, employers will have to pay the National Insurance and pension contributions for staff on furlough leave. The CJRS will cover the salary element up to 80%.

4. From 1^st September, the CJRS contribution reduces to 70% up to a cap of £2,187.50 per month. Businesses will have to pay 10% of wages for staff on furlough.

5. From 1st October, the government contribution reduces again to 60%, up to a maximum of £1,875. Employers will pay the remaining 20% of wages.

6. 31st October – the Coronavirus Job Retention Scheme will close.

Commenting on the changes, Doug Perry said:

“Employers will welcome the certainty over how the CJRS will evolve but the tapering off of support will be a challenge for those businesses that will struggle to return to ‘business as usual’ before the end of the Summer. The changes are also quite complex in terms of payroll and processing and business owners will need to make sure they understand the impact on their financial modelling as well as ensuring their CJRS submissions are accurate.”

For help with making a fast and accurate claim on the Coronavirus Job Retention Scheme portal or for any aspect of payroll advice, please email Doug Perry, or get in touch with the Clayton & Brewill team here.

Read our guide to furlough leave here