On Friday, May 29, 2020, the government announced further details regarding the already extended CJRS, and how it would start to gradually ease the support to businesses as the economy begins the process of getting back on its feet. Harrison Drury’s employment law team has been keeping up to speed with these developments.
To date, it’s understood that the CJRS has helped over one million employers across the UK furlough over eight million employees. Given the lifeline that the scheme has brought to both businesses and employees, the withdrawal of such support is going to mean employers need to be proactive in their plans post CJRS.
The government announced an extension of the CJRS on May 12, 2020. You can read more about that in our previous blog: Coronavirus Job Retention Scheme: Preparing your employees’ return to work.
Here is an outline on how the scheme will operate after June 2020:
So, what do employers now need to be aware of?
1. The CJRS will close to new applicants from the June 30, 2020, and employers will only be able to furlough employees that have previously been furloughed for at least a consecutive three-week period, prior to June 30. That means that the final date for employees to commence a period of furlough under the CJRS will be June 10.
2. From July 1, 2020 (initially intended to be from August 1, 2020), employers will be given the flexibility to bring furloughed employees back to the workplace on a part-time basis. It will be the employer’s responsibility to consult with their workforce and ensure employees are kept fully updated regarding any such changes, and it will be the responsibility of the employer to pay such workers 100% of their wages whilst they are in work.
It is essential that employers document consultations and any changes to terms of employment to provide clarity to affected employees, and also to protect the interests of the business.
3. From August 2020, the level of financial support provided by the CJRS will be gradually reduced to reflect employees returning to the workplace, as follows:
- August 2020: In terms of the payments, this is when the changes start kicking in. Again, as above, the government will pay 80% of wages up to a cap of £2,500. But note that employers will be required to pay employer National Insurance and pension contributions.
- September 2020: By this point, the government will pay 70% of wages up to a cap of £2,187.50. Employers will be responsible for paying employer National Insurance and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.
- October 2020: By this point, there is a substantial reduction in the amount of support being afforded to businesses as it’s predicted that the demand for such support will have significantly reduced by this time. The government will pay 60% of wages up to a cap of £1,875. Employers must pay employer National Insurance and pension contributions, and 20% of wages to make up 80% total, up to a cap of £2,500.
At the end of October 2020, the CJRS will end entirely and it will be the sole responsibility of the employer to pay its workforce.
We understand that further guidance in terms of how employers should calculate claims under the CJRS and how flexible furlough arrangements should work will be available mid-June. Keep an eye on our dedicated coronavirus COVID-19 legal support hub for further developments.
So what should employers be doing now?
First of all, know that you are not alone. There are thousands of company directors and managers sitting down and working out what’s best for their businesses and their people. It’s during such times that it’s paramount you’re getting access to any professional assistance needed.
Risk management, financial forecasting and resource are all terms that many businesses are already familiar with, along with the risks associated with not getting these things right.
Whilst the CJRS itself has been a unique and instrumental support function for many employers, it continues to have an unfettered risk on certain employee protections, including discrimination claims brought under the Equality Act 2010. It is imperative that such matters are kept in mind when dealing with any employment related matters, regardless of the employee’s length of service.
Before a business can enter into any form of discussion with its workforce, it needs to have a clear and accurate understanding of the options available and any risks associated with such options, as getting it wrong can result in costly tribunal proceedings and reputational damage.
If you are not doing so already, start using this time to get it right with your workforce.
Harrison Drury’s employment and regulatory team can provide expert advice and guidance to help businesses bring employees back into work, ending furlough leave, as well as giving support to organisations looking to restructure or carry out a redundancy exercise.
If you require any assistance in relation to the Coronavirus Job Retention Scheme, or for other employment related queries, please contact our team on 01772 258321.