As the UK begins to emerge slowly from lockdown, the Chancellor has announced modifications to the Government’s Coronavirus Job Retention Scheme (CJRS) and furloughing scheme. The moderations reflect the changing circumstances and help prepare for the end of what will have been an eight-month support measure.
The changes will begin to transfer financial responsibility back to employers by asking them to begin to contribute again, alongside the taxpayer, towards the wages of their staff. Recognising that many businesses have faced challenging conditions, the contributions will be relatively modest and will be introduced slowly over the coming months.
The key points
Furlough deadline: Wednesday 10 June 2020 will be the last day that employers can place employees on furlough. The scheme itself in its current incarnation will end on 30 June but employers will need to place new employees on the scheme by June 10 to allow them time to complete the minimum furlough period before the end of the month.
Flexible furlough: The existing scheme is changing to allow for the introduction of a ‘flexible furlough’ from 1 July. This means employees will be able to work part-time and be furloughed part-time. Businesses will be able to decide how that will look in terms of the time split that works best for them and the employee.
NI and Pension contributions: From 1 August, employers will have to pay employees’ National Insurance and pension contributions, and will no longer be able to reclaim them through the CJRS.
Tapering reimbursements: From 1 September, the government will only reimburse 70% of salary (up to a maximum of £2,190). This will reduce again from 1 October when the government will only reimburse 60% of employees’ salaries (up to a maximum of £1,875). Employers will be required to top up to 80% (or more, depending on what the employer agreed with the employee).
Closure of scheme: The furloughing scheme will close on 31 October 2020.
Extension of self-employment income scheme: The self-employed grant is being extended, with applications opening in August for a second and final grant. The final grant will work in the same way as the first did, paid out in a single instalment covering three months’ worth of average monthly profits. There will be parity with the reducing furlough scheme, paying 70% (not 80%) of average earnings up to £6,750.
More information on all the schemes is available on the government’s Coronavirus guidance and support webpage.
Following the lockdown-easing measures and this clear indication from the Government on when the furloughing scheme is going to end, many companies will be taking their cue to adapt and press on with their business plans for the remainder of 2020 and beyond.
Now is the time to start planning with a focus on how companies can prepare and emerge stronger from the challenges of the past few months while putting the foundations in place for a sustainable recovery.
If you would like some specific guidance and support on how to prepare your business for recovery, please get in touch, we’d be happy to help.