COVID19: Proposed changes to the Coronavirus Job Retention Scheme (CJRS)

Latest COVID19 Job Retention Scheme CJRS proposed changes – announced 29 May 2020 – The Chancellor has announced the government’s plans to change the CJRS which will now be re-engineered to support businesses sending staff back to work. Employers will be able to put staff on part-time furlough, claiming the CJRS grant for a portion of their salary.

Critically, employers will only be able to claim going forward if they have previously claimed under the pre-1 July scheme.

Note too that as there is a three-week minimum furlough requirement under the current rules, it follows that any new period of furlough leave must have started by 10 June 2020 to be complete when the current scheme ends on 30 June and so ensure the employee remains eligible from 1 July.

The proposed changes also introduce a new limit to the number of staff who can be included on a claim. This will be based on the maximum staff ever included in any single pre 1 July claim.

The Chancellor also confirmed that from 1 August 2020 the CJRS grant will no longer cover the cost of employers’ National Insurance or pension contributions with employers expected to cover these costs.

What is changing?

For July 2020 the grant will be available on the same basis as now (the lesser of 80% of pay and £2,500). The intention is that the government will reduce its contribution over the remaining months of the scheme – August to October – with a corresponding increase in the employer contribution.

August 2020 – the CJRS will continue to pay 80% of wages but employers must pay national insurance and pension costs
September 2020 – the CJRS will pay 70% of wages while employers will take on the other 10%, employers must pay national insurance and pension costs
October 2020 – the CJRS will pay 60% of wages while employers will take on the other 20%, employers must pay national insurance and pension costs

The revised scheme has many of the same features as the current scheme which runs between 1 March and 30 June 2020, but there will be some significant changes intended to encourage those previously furloughed back to work:

Employees who were previously furloughed will be able to return to work on a flexible part-time basis.
For those staff who are furloughed part-time, employers will be required to pay for the cost of the time staff are working. A grant will be available for the cost of their furloughed hours.

Employees must have been furloughed under the current scheme (CJRS V1) for them to be eligible for a furlough grant under the revised scheme (CJRS V2). So, in practice, only employees who have been included in a furlough grant claim made before 1 July 2020 can be furloughed under CJRS V2.

The furlough scheme will therefore be closed to new entrants after 30^th June 2020, so if you are considering making a claim for June and have not made a claim for the CJRS in another period, please ensure you do this, or speak with your payroll provider as soon as possible.

Further points to note about the New CJRS being introduced from 1^st July 2020

A new minimum reporting period of one week will apply from 1 August 2020. More frequent claims will not be accepted, but the reporting period can be longer.
From 1 July, claim periods will no longer be able to overlap months, employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this going forward. This is necessary to reflect the forthcoming changes to the scheme.
The grant will be based on the same premise as now, so the employee must be paid the lesser of 80% of reference salary and £2,500 per month. The government contribution to the 80% of reference salary is being reduced as the scheme progresses.
From 1 August onwards, the scheme will no longer cover the cost of employers’ National Insurance nor pension contributions applicable to the grant.
The new calculation will apply from 1 July to factor in the cost of hours worked to hours furloughed ratio.
Employers can claim the grant for the hours their employees are not working calculated by reference to their usual hours worked in a claim period. Further details will be included in future guidance.
Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts
There will be a new maximum limit to the number of staff who can be included on a claim. This will be based on the maximum staff ever included in a single claim under CJRS V1.
CJRS V2 will end on 31 October 2020.

If you have further queries your accountant should be able to help you.

HB Accountants are accountants for business. For financial and accounting guidance and support, please contact Keith or Karen. We’re still working hard for all our clients to help you make the right decisions.

We are here for you during this difficult time. Our business contingency plan is in place and we will do everything we can to support our clients during this uncertain period, please do not hesitate to contact us here if you have any concerns or queries.

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The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any errors or omission or for any person acting on or refraining from acting on the information provided in the above