What You Need To Know

Marco Green
June 3, 2020

Laura Kearsley, partner in Nelsons' expert employment law team, has explained what the changes, which were announced on Friday, 29 May by Chancellor Rishi Sunak, mean for employers.

There is now only a week available for workers to discuss potential furlough agreements with their employer's, who ultimately make the decision on who will benefit from the scheme.

In August the UK Government will continue to pay 80% of the wages of furloughed staff, up to £2500, but businesses will be required to pay National Insurance and pension contributions.

What changes have the government made to the CJRS?

Government will pay 70% of wages up to a cap of £2,187.50. Failure to have introduced this flexibility would have increased the risk of a slew of redundancies, particularly in companies with neither the short-term work demands nor the financial resources to move furloughed employees straight back onto their old work patterns. The government will continue to pay 80 per cent of furloughed people's wages, up to a maximum of £2,500.

If you are a smaller employer, some or all of your employer NIC bills will be covered by the Employment Allowance, so you should not be significantly impacted by that part of the tapering of the government contribution.

When will the CJRS scheme close?

The Theatres Trust, a national advisory public body for theatres, today warned that these modifications to the scheme (whereby employers have to pay a small part of furloughed employee salary as well as National Insurance contributions and pensions) "will make redundancies throughout the sector inevitable" and may "close theatre businesses", with 70 per cent of United Kingdom venues already stating that they'll run out of money by the end of 2020.

With large swathes of the United Kingdom economy still unable to return to work or working at a far lower capacity, the chancellor confirmed in mid-May that the Coronavirus Job Retention Scheme would be extended until the end of October.

"The government should look again at this announcement and consider applying a flexible furlough arrangement for pubs until later in the year, helping them survive restricted re-openings". However, from August employers will be asked to pay National Insurance and pension contributions.

Rather than a sudden cut-off which might have led to fast rise in unemployment, Sunak has gone for a phased approach that will see employers making more of a contribution as the months go by from August but able to bring furloughed workers back in, part-time, from July.

When claiming the CJRS grant for furloughed hours, you will need to report and claim for a minimum period of a week. The minimum claim period will be a period of one week.

"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 on how flexible furloughing will work will be published on 12 June, Mr Sunak confirmed.

What should I do if I feel like I may need to make redundancies?

CAMRA chief executive, Tom Stainer, said many pubs "just won't be able to pay towards wages, National Insurance and pension contributions on top of existing costs and during periods of reduced trade due to social distancing measures reducing capacity". However, they will now have to pay 20% of employee wages.

"The Job Retention Scheme has allowed a million employers to keep 8.4 million employees on their payroll, ready to return to work as soon as safe to do so, while continuing to contribute to their workplace pensions".

Other reports by Click Lancashire

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