Almost nine million workers furloughed with changes to job retention scheme coming

2 June 2020, 11:00

The Chancellor Rishi Sunak has previously announced changes to the scheme
The Chancellor Rishi Sunak has previously announced changes to the scheme. Picture: PA
EJ Ward

By EJ Ward

Almost nine million workers have been put on the Government's job retention furlough system, according to new figures released ahead of planned changes to the scheme.

The Coronavirus Job Retention Scheme (CJRS) which was introduced as part of a package of measures to safeguard jobs and ease the impact of Covid-19 on businesses across the country.

Since the launch of the scheme £17.5 billion has been claimed by 1.1 million employers to put their staff on furlough in order to save their jobs.

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Businesses have placed 8.7 million workers on the Government's coronavirus job retention scheme.

The scheme was announced by Chancellor Rishi Sunak, and those on furlough have had the Government paying 80 per cent of the salaries, up to £2,500 per month.

On Friday, May 29, the Chancellor announced changes to how the scheme operates which will impact on those who are currently on furlough.

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Laura Kearsley, a partner in Nelsons’ expert employment law team told LBC News the scheme will continue in its current format until the end of July 2020.

After that date, employees on furlough leave will continue to receive 80 per cent of their salary but employers will be required to start contributing under the scheme.

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What changes have the government made to the CJRS?

Laura said: “From 1 August 2020, the government will continue paying 80 per cent of salary up to a monthly cap of £2,500. However, employers will have to pay employer’s NI contributions and pension contributions as they will no longer be able to reclaim those amounts under the CJRS.

“The following month, from 1 September 2020, the government will pay 70 per cent of salary up to a monthly cap of £2,187.50, with employers being required to top the salary up to 80 per cent up to a cap of £2,500. Again, employers will need to pay employer’s NI and pension contributions.

“From 1 October 2020, the government will pay 60 per cent of salary up to a monthly cap of £1,875. Employers will be required to top the salary up to 80 per cent (again – to a cap of £,2500), while also paying employer’s NI and pension contributions.

“As before, employers can still opt to top up an employee’s salary over and above the 80 per cent if they wish.”

The changes:

June and July - No change to the furlough scheme

August - Employers pay National Insurance and employer pension contributions.

September - Employers pay 10% of wages.

October - Employers pay 20% of wages.

When will the coronavirus job retention scheme end?

Employment law expert Laura told LBC news the scheme will close to new applicants on 30 June 2020. This means that employers considering furloughing more of their employees must do so by 10 June at the latest to ensure that those employees have spent the required minimum three consecutive weeks period on furlough by 30 June.

"The CJRS as a whole will end on 31 October 2020,” Laura said.

What is flexible furloughing?

In his announcement, the Chancellor also confirmed that a more "flexible" form of furlough was planned with effect from 1 July 2020.

From that date, employers will be permitted to agree to more flexible working arrangements with furloughed employees.

Laura told LBC News: “For example, employers and employees can agree a return to work on a part-time basis with employees working any number of days/hours per week and shift patterns to suit the needs of the business.

“Employers will be required to pay employees in full for any time spent working and will be responsible for tax and NI contributions and those payments. Employers will not be able to reclaim under the CJRS for payments made in respect of time spent working but will still be able to reclaim under the CJRS for employees’ ‘normal’ hours that are not worked.

“When claiming under the CJRS, employers will have to report on hours worked and the usual hours an employee would be expected to work in a claim period. The minimum claim period will be a period of one week.

“In order to be eligible to reclaim under the CJRS for hours that are not worked, employers and employees will need to agree new flexible furloughing arrangements and any such agreement must be confirmed in writing.

“In light of the new flexibility to the CJRS rules, from 1 July 2020 claims will no longer be able to overlap calendar months. Further guidance regarding flexible furloughing is expected to be published on 12 June 2020.”

What options do employers have when it comes to redundancies?

“Faced with uncertain trading times for many businesses and partial financial responsibility for all employees from 1st August, many employers will need to review their workforce and requirements to consider whether current levels of staffing are sustainable," employment law expert Laura told LBC News.

“If an employer intends to make more than 20 people redundant, this triggers collective consultation requirements, including minimum consultation periods during which redundancy dismissals cannot take effect. The consultation period for employers who anticipate making 100 or more people redundant is 45 days and for those anticipating making between 20 and 99 redundancies is 30 days.

“For employers who are concerned about the changes in the furlough scheme, they need to think carefully about whether they want to commence redundancy consultations now so that they are in a position to make redundancies before the government funding reduces – rather than waiting until that point to start consultation and being faced with employment costs during the consultation period.

“As well as complying with the requirements of collective consultation (which include liaising with recognised trade unions or elected employee representatives), employers that are making any number of employees with more than two years’ continuous service redundant will need to adhere to minimum requirements in terms of consultation and meetings – this could be challenging in the coronavirus lockdown.

“We cannot emphasise the importance of planning ahead wherever possible enough, particularly now employers have a much clearer idea of what the CJRS will look like going forward, when they will be required to start paying non-reclaimable monies to employees under the scheme and when it will end.”