Coronavirus Job Retention Scheme Update including closure of the Scheme to new entrants and the introduction of tapered grant contributions

Posted on 3rd June 2020 by Streets


Image to represent Coronavirus Job Retention Scheme Update including closure of the Scheme to new entrants and the introduction of tapered grant contributions

The Chancellor, Rishi Sunak, provided an update on the Coronavirus Job Retention Scheme on Friday 29th May. His announcements included guidance on the introduction of flexible furlough, closure of the scheme to new entrants from July and the introduction of a tapering of the grant from August.


Whilst further guidance on flexible furloughing, which is to come into effect from 1st July, is to be published on Friday 12th June, we have endeavoured to outline below a summary of the key changes to CJRS and furlough going forward. 

Flexible Working

From 1st July…

From 1st July employers can bring back to work employees who have previously been furloughed for any amount of time and any shift pattern, whilst still being able to claim under the Scheme for their normal hours not worked.

From 1st July, employers will be able to agree any working arrangements with previously furloughed employees.

When claiming the grant for furloughed hours, employers will need to report and claim for a minimum period of a week.

To be eligible for the CJRS grant, employers must agree with their employees any new flexible furloughing arrangements and confirm the agreement in writing.

Employers can claim the grant for the hours their employees are not working calculated by reference to their usual hours worked in a claim period.

Employers will need to report hours worked and the usual hours an employee would have been expected to work in a claim period.

For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and National Insurance Contributions due on those amounts.

The Scheme’s closure to new entrants

From 30th June…

From 30th June the Scheme will be closed to new entrants. From this date employers will only be able to furlough employees who have already been furloughed for a full three-week period prior to 30th June.

The last date by which an employer can furlough an employee for the first time will be Wednesday 10th June.

Employers will have until 31st July to make any claims in respect of the period to the 30th June.

From 1st July…

From 1st July the Scheme will only be available to employers that have already engaged with it for employees already furloughed. It is also important to note that claim periods will no longer be able to overlap months - employers who have previously submitted claims with periods that overlapped calendar months will no longer be able to do so going forward. This is necessary to reflect the forthcoming changes to the Scheme.

Employer Costs and the introduction of the tapered grant

In June and July…

Under the Scheme the government will continue to pay 80% of wages up to a cap of £2,500, as well as Employers National Insurance Contributions and pensions contributions for the hours an employee does not work. 

In August…

The level of grant made under the Scheme will be tapered to reflect that employees will be returning to work. As such whilst the government will continue to pay 80% of wages up to a cap of £2,500, employers will be required to pay Employers Nations Insurance Contributions and pensions contributions for the hour’s employee does not work.

In September…

The government will reduce the grant to 70% of wages up to a new lower cap of £2,187.50 for the hours an employee does not work. Employers will be required not only to pay Employers National Insurance Contributions and pension contributions but also 10% of wages to make up the 80% total up to the cap of £2,500.

In October…

The government will further reduce the grant to 60% of wages up to a new lower cap of £1,875 for the hours an employee does not work. Employers will be required not only to pay Employers National Insurance Contributions and pension contributions but also 20% of wages to make up the 80% total up to a cap of £2,500.


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Information

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