Phasing out Coronavirus Job Retention Scheme and introduction of ‘flexible furlough’

On Friday 29 May, the Chancellor, Rishi Sunak, announced the gradual phasing out of the Coronavirus Job Retention Scheme (CJRS) with its complete conclusion set to take place on 31 October 2020.

The changes outlined mean that employers will be required to gradually take back responsibility for the salaries of any furloughed employees until the end of the scheme.

The Chancellor has now confirmed that the final deadline for placing employees on furlough is 10 June. From 1 July a ‘flexible furlough’ system will be established, where employees will be able to return to work on a part time basis and be part-time furloughed. As with a standard CJRS, claims can still be made for the ‘furloughed hours’ however, employers will be required to pay in full for any hours worked, this also includes tax, pension and national insurance contributions on the payments made.  

New ‘flexible furlough’ agreements will have to be formed between the employer and employee. Further guidance on this will be released by the Government on 12 June.

August 1 marks the date from which employers will no longer be able to reclaim employee’s national insurance contributions and pension contributions through the Coronavirus Job Retention Scheme. Those will have to be funded by the employer.

As of 1 September, the government’s contribution to the salary of furloughed workers will reduce from 80% to 70%, up to a maximum of £2,190 per month. With employers being required to top this up at least 80% (this may be more depending on the furlough agreement with the employee).

From 1 October the 70% contribution will be lessened to 60%, up to maximum of £1,875 per month until the closure of CJRS on 31 October 2020.

Grant made available to self-employed individuals will also be extended. Individuals can make applications for a second and final grant from August. The grant will follow the furlough scheme in relation to the tapering of government payments and pay 70% of average earnings up to £6,750.

 

If you require any support in relation to the Coronavirus Job Retention Scheme, or any other tax matters, do not hesitate to contact us.