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‘Furlough’ entered the popular lexicon following the UK Government’s response to the coronavirus crisis.
With the pandemic affecting millions, it is expected that employers’ reliance on the UK Government’s Coronavirus Job Retention Scheme (CJRS) will only become greater as businesses try to deal with the fallout of the virus.
In our latest blog, we explore what it means and why the launch of the furlough scheme is an important step in providing employees and employers with stability, security, and support.
Coronavirus Job Retention Scheme NOW open for applications
(Updated 18 June 2020)
Changes to CJRS were announced on 12 June 2020. The full details are available via this link to the Government website Changes to the Coronavirus Job Retention Scheme.
CJRS went live on 20 April 2020, so businesses hit by Coronavirus (COVID-19) can apply online for a grant from HMRC to cover the labour costs of furloughed staff.
CJRS is a wage support measure announced by the Government in response to the COVID-19 crisis. It is designed to protect and support employers, who are facing difficulties, to continue paying wages rather than making people redundant.
Under the initiative, the Government will cover 80% of furloughed workers’ wages for March, April, May, June and July up to £2,500 per person, per month, before tax.
Although announced back in March, companies could only claim with the online portal from 20 April 2020. The reimbursement is expected to arrive within six working days of making the claim.
Who can claim?
To claim for CJRS you must have:
- Created and started a PAYE payroll scheme on or before 19 March 2020
- Enrolled for PAYE online
- A UK bank account
Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.
New adjustments to the CJRS set to take effect from 1 July 2020
Originally announced by Chancellor Rishi Sunak in March, the job retention scheme is part of a broader package of support and allows employers to claim the funds to help pay wages.
The scheme came into effect on 1 March and was due to last an initial three months. However, the CJRS has now been extended until 31st July 2020 to reflect the fluid situation. The scheme will now close on 31 October 2020.
In a press release issued on 15 April 2020, the Government announced the extension of the CJRS cut-off date to 19 March 2020 (previously individuals had to be employed on 28th February). Employers are now able to claim for furloughed employees who were on their payroll on or before this date.
However, new adjustments to the CJRS are set to take effect from 1 July 2020. From this date, only those employees that a business has successfully claimed a grant for will be eligible for further reimbursements under the scheme. Any employees not yet furloughed must be furloughed by 10 June 2020 for them to reach the minimum furlough threshold of three weeks. After this date, the scheme will be closed to new entrants.
- Companies will only be able to make claims for July from 1 July (claims for periods in July are not accepted before this date).
- 31 July is the last day that companies can submit claims for periods ending on or before 30 June.
- From 1 July 2020, employers can bring furloughed employees back to work for any amount of time and any shift pattern, whilst also claiming the CJRS grant for the hours not worked.
- However, from 1 August 2020, the level of grant will be reduced over subsequent months. Currently, employers must pay furloughed employees 80% of their wages, up to a cap of £2,500 per month. This will change over the coming months, and in October the level of grant (government contribution) will reduce to 60% of wages up to a cap of £1,875 per month.
- Employers can continue to choose to top up employee’s wages, but this remains at the discretion of the employer.
- The scheme will close on 31 October 2020.
- Government contributions for employer NICs and pension contributions will phase out from August.
- Employers will begin to incrementally make increasing NICs and pension contributions from August through October 2020.
In other news, HM Treasury recently announced the launch of a £1.25 billion package to help protect the UK’s innovation sector and its startups and early-stage scale-ups during the pandemic.
Additional support is also available to small and medium-sized businesses (with turnover less than £45 million) through the Coronavirus Business Interruption Loan Scheme (CBILS).
Need some help?
Please get in touch with our HR Services team if you think we can help.
(Image source: Matt Seymour on Unsplash)