Preparing for the upcoming changes to furlough

The Coronavirus Job Retention Scheme (CJRS), more commonly referred to as furlough, will now be extended until the end of September this year following confirmation in the recent Chancellor’s Budget.

First introduced a year ago, the scheme has provided an essential lifeline to employers, helping them shoulder the employment costs for employees who were unable to work or who work reduced hours due to the pandemic and its restrictions.

The level of grant available to employers under the CJRS will be maintained until 30 June 2021, under the latest extension, meaning employers will only be responsible for paying pension and National Insurance contributions.

To prevent an abrupt end to the support available, from 1 July 2021, the level of the grant will be reduced so that employers start making additional contributions to the scheme.

To be eligible for the CJRS, employers must continue to pay furloughed employees 80 per cent of their wages, up to a cap of £2,500 per month for the time they spend on furlough.

But in July the amount of support given by the Government will be limited to 70 per cent (capped at £2,187.50), with the remaining 10 per cent provided by the employer.

Then from 1 August until the end of the scheme on 30 September 2021, employers must contribute 20 per cent, with the Government covering the remaining 60 per cent of a person’s regular wage (capped at £1,875).

In addition to the 10 per cent and 20 per cent contributions made in July, August and September, employers must continue to pay employers National Insurance and pension contributions on the full amount being paid to employees.

For CJRS claims from 1 May 2021, employees on an RTI submission before 2 March 2021 will be eligible for furlough.

Employers can claim before, during or after they process their payroll, as long as a claim is submitted by the relevant claim deadline.

Claims must be submitted by 11.59pm, 14 calendar days after the month being claiming for unless this day falls on the weekend or a bank holiday, then claims should be submitted on the next working day.

Employers must prepare for these upcoming changes and consider the impact that the additional employment costs may have on their business.

In some cases, businesses may need to consider redundancies, which may require a lengthy consultation process, so preparations should be taken now.

If you would like assistance with managing these changes or have any queries about the CJRS, please contact us.