The Coronavirus Job Retention Scheme (CJRS) opened for claims on 20 April 2020.
The scheme, which was originally due to end on 31 May, will remain in place and be available to employers in all sectors through to the end of October 2020.
However, a number of changes will apply from today (1 July 2020). These are reflected in our updated briefing on the CJRS and pensions.
The briefing also examines the impact of the CJRS and flexible furlough on pension contributions, auto-enrolment, salary sacrifice arrangements and other salary-related benefits.
Changes to the CJRS
From today, there is greater flexibility under the CJRS, with furloughed employees being allowed to return to work for their employer on reduced hours. Where furloughed employees return to work on a partial basis, an employer will continue to be able to make a claim under the CJRS to cover some of the costs associated with the employee's normal contractual hours for which they are not working.
In addition:
- the CJRS is now closed to new entrants (with limited exceptions), meaning a claim can only be made in respect of any period on or after 1 July to the extent that it relates to an employee who has previously been furloughed for a minimum of 3 weeks prior to 30 June 2020 (other than an employee who is returning from statutory family leave or who is a returning military reservist), and
- the process for making a claim is changing for periods on and after 1 July.
Sharing the costs
Employers will also be required to start sharing the cost of the scheme with effect from 1 August 2020, so that:
- from that date, employers will no longer be able to recover the cost of employer pension contributions or employer NICs under the CJRS
- for the period 1 September to 30 September 2020, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work. Employers will be required to pay employer NICs and pension contributions and 10% of wages to make up a total of 80% capped at £2,500, and
- for the period 1 October to 31 October 2020, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work. Employers will be required to pay employer NICs and pension contributions and 20% of wages to make up a total of 80% capped at £2,500.
In addition, where a furloughed employee returns to work on reduced hours, the cap that applies to the amount that can be claimed under the CJRS will be reduced to reflect the proportion of the employee’s usual contractual hours during which they have not worked.
Comment
The CJRS has enabled many employers to retain staff who they might otherwise have had to make redundant as a result of the economic impact of Covid-19 and the measures introduced to limit its spread. The CJRS remains in place to support employment, and with increased flexibility, as the lockdown restrictions begin to ease and as businesses re-open and start to expand their operations once again.
However, with this new flexibility comes increased complexity. Therefore, it is vital that employers understand the new rules around flexible furlough, eligibility, recoverability and making claims and that they consider how the changes will impact their pension contributions and other employee benefits.
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Disclaimer
The articles published on this website, current at the dates of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action.