The Chancellor, Rishi Sunak, announced more details of the extension of the CJRS on 29 May. A greater degree of flexibility in the scheme is something that had been pushed for since its inception and, in May, it was announced that this would happen with effect from 1 August. However, it has now been confirmed that employers will have the flexibility to bring previously furloughed workers back to work part-time with effect from 1 July. To be eligible for the grant after that date employers must agree any new flexible arrangements with the employee and confirm that agreement in writing.
The Government will continue to pay 80% of wages (subject to the monthly cap of £2,500), employer NIC's and pension contributions for any of the employees' normal hours that they do not work up until the end of July. Employers will though be responsible for paying 100% of wages for the hours the employees are working.
A tapering of the grant will begin in August. During that month the Government will continue to pay 80% of wages up to the cap but employers will take over payment of employer NICs and pension contributions.
In September, the Government contribution will lower to 70% of wages up to a cap of £2,187.50 for the hours the employee is not working. Employers will continue to pay employer NICs and pension contributions, and, additionally, must pay 10% of wages to make up to 80% of the total wages, up to the cap of £2,500.
Finally, in October, the Government contribution will lower again to 60% of wages up to a cap of £1,875 for the hours the employee does not work. Employers will continue to pay employer NICs and pension contributions, and will have to pay 20% of wages to make up to 80% of the total wages, up to the £2,500 cap.
The cap on the furlough grant will be proportional to the hours not worked - so if the employee is not working for 50% of his or her normal working hours the cap would be £1,250 during July and August, £1,093.75 in September and £937.50 in October.
It is also important to note that, with the exception of parents on statutory maternity, shared parental, adoption, paternity or parental bereavement leave ("family leave") and employees who are military reservist returning from mobilisation after 10 June 2020 the CJRS will close to new entrants from 30 June. From that point onwards employers will only be able to furlough employees that have already been furloughed for a full three week period prior to 30 June. Employees who have previously been furloughed and returned to work, or who are rotating on and off furlough, do not require to be furloughed again prior to 30 June to be eligible. However, any employee who has not been previously furloughed (other than those on family leave) must be furloughed for the first time by no later than 10 June to be eligible for the scheme from 1 July.
Employees on family leave who are due to return to work after 10 June will be permitted to be furloughed however this will only apply where they work for an employer who has previously furloughed employees.
For periods starting on or after the 1 July, the maximum number of employees that an employer can claim for in any period cannot be higher than the maximum number the employer has claimed for in a previous period. For example, if the highest single claim for periods up to 30 June was for 100 people, the employer can’t claim for more than this number in later periods. The only exception to this is where an employee has returned from family leave, or where a TUPE transfer has taken place after 10 June. In the case of the TUPE transfer the new employer can only furlough the transferred employees if they have previously been furloughed by the old employer.
The monthly tapering of the Scheme necessitates changes to the claim periods so from 1 July claim periods can no longer overlap calendar months. Employers will have until 31 July to make a claim for any periods of furlough up until 30 June – this applies to both employees furloughed for the first time and those that have previously furloughed and claimed for. The 3 week minimum furlough period will no longer apply for any furlough from 1 July onwards. However, any claim to HMRC must cover a period of at least 7 days. The only exception to that will be where an employees' period of furlough straddles the end of one month and beginning of the next. So if the period of furlough ends on 3 August the employer can claim for those 3 days in August.
A second and final grant is also to be made available under the Self Employment Income Support Scheme. As with the first grant it will be paid out in a single instalment covering three months' worth of profit. This time however the grant is worth 70% of average monthly trading profits, capped at £6,570 in total. An individual does not need to have claimed the first grant to be eligible for the second grant. Applications will open in August, and more information is going to be made available on gov.uk on 12 June.
More details on the updated guidance published on 12 June is available here.