The Government, has announced further changes to the Coronavirus Job Retention Scheme (CJRS) which confirms the introduction of flexible furloughing and also the increased costs to employers if they are furloughing employees from 1 August onwards:

Changes to the Coronavirus Job Retention Scheme

In terms of flexible furloughing, the Government has confirmed that, from 1 July, employers can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim CJRS grant for the hours not worked. Prior to 1 July 2020, it remains the case that employees on furlough cannot undertake any work for their employer other than training. The ability to flexibly furlough employees will be of interest to many employers where there is some work for employees to do as we move out of lockdown but not enough to justify a return to normal working hours.

Employers who want to flexibly furlough employees, will need to agree this with the employee (or reach collective agreement with a trade union if there is one) and keep a new written agreement that confirms the new furlough arrangement.

Employers will need:

• to make sure that the agreement is consistent with employment, equality and discrimination laws
• keep a written record of the agreement for five years
• keep records of how many hours their employees work and the number of hours they are furloughed (i.e. not working).

Increased costs to employers for furloughing employees:

• There are no changes to grant levels in June.
• For June and July, the government will pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee is on furlough. Employers will have to pay employees for the hours they work.
• For August, the government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay ER NICs and pension contributions for the hours the employee is on furlough.
• For September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
• For October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
• Employers will continue to able to choose to top up employee wages above the 80% total and £2,500 cap for the hours not worked at their own expense if they wish. Employers will have to pay their employees for the hours worked.

For what started as a relatively basic scheme is now becoming complex particularly in calculating the amount that can be reclaimed under the CJRS.  As such, employers who are furloughing employees should also review the updated guidance on how to work these sums out:

Claim for wages under the Coronavirus Job Retention Scheme

Examples of how this works in practice

As the scheme becomes more complex and with increased costs to employers, it is inevitable that some employers will reconsider the furloughing of employees and look at other options including changing terms of employment and in some cases redundancies.

If you have any questions on the changes to furloughing employees or alternative steps that you may need to consider, please contact Matt Jenkin.