Wayne Thomas, partner at Bates Weston recaps the imminent changes to CJRS and stresses the need to plan ahead.
From 1 August:
- Unless you are making a new claim for an employee who is a military reservist or returning from statutory parental leave, you can only continue to claim through the scheme if:
- You have previously furloughed the employee for 3 consecutive weeks between March 1 and 30 June
- You submitted your claim before 31 July
- Employers are now required to contribute towards the cost of furloughed employees’ wages. The government will continue to pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough but employers will pay Employer National Insurance Contributions (ER NIC) and pension contributions for furloughed hours
CJRS grants are conditional on the employer continuing to pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed. The reduction in the amount of the support given to the employer by the government does not impact the amount of wages the employer should give to the employee. It remains at 80%, up to the £2,500 cap.
So this means that from 1 September, when the government support drops again, although the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough, the employer will pay ER NIC and pension contributions and top up the employees wages to ensure that the employee receives 80% of their wages up to a £2,500 cap, for the time they are furloughed.
Wayne Thomas comments:
“It is important for employers to understand their obligations to furloughed employees, particularly that as the levels of government support falls, they are expected to maintain their employees furloughed wages at 80%. With flexible furloughing an option since 1 July, the wage calculations are increasingly complex, but is essential that businesses plan ahead to anticipate the impact of rising wage costs on their cashflow position.
We will continue to support our clients in successfully navigating the changing CJRS.”