On Friday 29 May, the Chancellor provided some of the detail on the extension of the Coronavirus Job Retention Scheme (CJRS) which had previously been announced on 12 May.
How long will the CJRS be open for?
The Chancellor confirmed that the CJRS will only remain open until 31 October 2020. Further he confirmed that if an employee had not been placed on furlough leave by the 10 June, furlough leave and the CJRS will not be available to the employer/employee. This will have an impact for employers who have been rotating employees using the three week minimum furlough period.
What changes have been made to the payments under the CJRS?
In June and July, the CJRS will continue to pay 80% of the furloughed employees’ salaries up to the maximum cap pf £2,500, as well as national insurance contributions and pension contributions at the auto-enrolment rates.
From 1 August, employers will have to pay employee's national insurance contributions and pension contributions, and can no longer reclaim them through the CJRS.
From 1 September, the CJRS will only reimburse 70% of salary (up to a maximum of £2,190). Employers are required to top-up to 80% (or more, depending on what the employer agreed with the employee) as well as national insurance and pension contributions.
From 1 October, the Government will only reimburse 60% of salary (up to a maximum of £1,875), and employers will continue having to top up to 80% (or more depending on agreement) as well as national insurance and pension contributions.
Can employees return to work before then?
It remains open to employers to end the period of furlough (so long as it lasted for a minimum of three weeks).
In June and July, employers have the flexibility to bring furloughed workers back on a part-time basis. It is for employers to decide the hours and shift patterns for those returning employees and there is no maximum or minimum period that they are required to work and stay on furlough. However, the employer will be responsible for any wages and it is assumed associated costs while the employee works. Detail on the calculation of furlough pay during this flexible period remains outstanding.
Employers should also consider their statutory obligation to provide a safe place and system of work when bringing employees back to work. For advice on health and safety consultation or risk assessments, please contact us on the numbers below.
Are there any other changes?
The Treasury Directions were updated by the Chancellor on the week ending 22 May and cover the following:
- Statutory Sick Pay – there is new wording on the interaction between SSP and furlough leave and the Direction confirms that if SSP is due to be paid to an employee, then they cannot be furloughed until the period of incapacity has ended, provided that the end of the period of incapacity has been agreed between employer and employee. It was hoped that the updated Direction would resolve the contradiction between the Direction and the Guidance itself. Unfortunately, that is not the case due to slightly clumsy drafting. As the Guidance has no legal effect, the Direction should be applied but this update appears to allow employers and employees to agree that a period of incapacity has come to an end and the employee placed on furlough leave. This may be the case even where an employee has a fit note for a lengthy period.
- Agreement in writing – the Direction no longer appears to require the employee’s agreement in writing to be furloughed. Now, “notification” is all that is required. Despite this, employees will still require to agree to be furloughed and so we suggest employers continue to document said agreement in writing.
- Study or training – if furloughed employees are to undertake study or training during their period of furlough leave, the purpose of this must be to improve an employee’s effectiveness in the employer’s business or the performance of the employers business. However the training must not provide a service to the employer or result in anything that generates income or profit for the employer.
- Non-discretionary payments – it is now clear that overtime, fees, commissions, piece rates can count as “regular pay” under the Scheme.
- TUPE – the relevant date for TUPE transfers has been changed from 19 March 2020 to 28 February 2020, which means that claims under the Scheme can be made in respect of employees transferred under TUPE even if there has been no RTI submission before 19 March 2020. This is an important backdating so employers who have recently TUPE’s staff should be mindful of the change in date.
This will not be the last update to the CJRS and furlough leave as the Treasury Directions will require a further update to accommodate the above changes as will the Guidance. It is important that when making decisions employers have the most up to date information and where necessary take advice on how the general guidance might impact on specific circumstances.