COVID-19: Chancellor announces future plans for the Coronavirus Job Retention Scheme

Please Note: All information correct at time of writing on 1 June 2020. We do our very best to make sure our information is as up to date as possible, but we’d encourage you to check out our latest articles and to check the government website for updates as they happen.

On Friday 29 May, Chancellor Rishi Sunak led the government’s daily press briefing on their continued measures to tackle the effects of the COVID-19 crisis on public life and the UK economy.

As expected, Sunak used this opportunity to unveil the government’s plans for the future of the furlough scheme.

  • The Coronavirus Job Retention Scheme will continue as before throughout June and July with no employer contribution.
  • In August, the government will continue to pay 80% of wages but employers will have to pay National Insurance and Employer Pension contributions, which he said for the average claim accounts for just 5% of total employment costs.
  • In September the government will pay 70% of wages with employers contributing the remaining 10% (on top of NI and Employer Pension contributions).
  • In October, the government will pay 60% and employers will pay the remaining 20%.
  • The scheme will close at the end of October.

The government are introducing a new flexible furlough which they see as key to kick-starting the economy. This will start from 1 July and it will give employers the flexibility to decide the best arrangements for them and their staff. The Chancellor gave an example of how this will work:

Employee A works five days a week. Their employer decides to bring them back for two days a week. The employer will pay them normal pay for those two days and they will be paid furlough pay (at the usual 80%) for the remaining three days.
  • The current scheme will be closed to new entrants on 30 June. Employers who want to place employees on the scheme for the first time will have to do so by 10 June to allow them time to complete the minimum 21-day furlough period before then.
  • Mr Sunak said that he had listened to requests to extend the self-employment income scheme and he announced that it will be extended, and applications will open in August for a second and final grant. This second grant will work on the same basis as the first – a one-off payment covering three months of average monthly profits. To maintain a sense of fairness with the CJRS, the grant will be 70%, up to a total of £6570. There will be no further extensions to the schemes.

Updated HMRC guidance on the Job Retention Scheme

Following the Chancellors announcement on Friday evening, on the morning of Saturday 30 May HMRC revised its CJRS guidance to clarify how the scheme is changing.

Who you can claim for

The scheme is closing to new entrants from 30 June. After that date, the guidance states, "you will only be able to furlough employees that have been furloughed for a full 3 week period prior to 30 June."

On a strict reading of this wording, this does not require the employee to be on furlough immediately before 30 June and if the employee has served a three week furlough period at some point prior to this date, they should be eligible under the flexible furlough scheme.

This interpretation seems to be supported by the fact that the guidance goes on to say "the final date by which an employer can furlough an employee for the first time will be 10 June, in order for the current 3 week furlough period to be completed by 30 June.”

The furlough period

The guidance states that under the flexible scheme, employers will need to report and claim for a minimum period of a week (rather than the current 3-week period).

Time for making claims

Employers will have until 31 July to submit claims for the period up to 30 June.

Further guidance on how the flexible furlough scheme will operate and how employer’s should calculate claims will be published on 12 June. Keep an eye on our latest articles to find out our latest guidance on the government’s updates.

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