Coronavirus Job Retention Scheme update

DATE 02nd June 2020

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On 29 May, The UK Chancellor announced changes to how the CJRS arrangement will work for businesses who have furloughed employees. The CJRS arrangement has helped the UK mitigate the need for wide-scale redundancies with over 8m employees and 1m businesses using CJRS to keep employees in a job and keep their business going.

We set out below the main announcements:

What is not changing?

  • There are no changes to the scheme up until 31 July 2020 – therefore employers will receive the same support as they currently do – 80% of pay up to a maximum of £2,500 per month, plus associated pension and employer NIC costs.

What is changing – a timeline

  • From 1st July 2020 – “Flexible Furlough” will be introduced, which means a CJRS grant can be claimed for the days an employee is on furlough even if they return to work for certain days (e.g. on furlough for three days of the week and working two days). This introduction of the Flexible Furlough means that CJRS cannot be used for anyone who has not been furloughed before 10th June 2020.
  • From 1st August 2020 – whilst the employer will still be able to claim a CJRS wage grant of up to £2,500 (or 80% of pay if lower) per month, the additional CJRS pension and NIC support will stop.
  • From 1st September 2020 – The employer will be required to pick up 10% of the CJRS wage costs, with the Government’s contribution, therefore, reducing to 70% (maximum of £2,187.50)
  • From 1st October 2020 – The employer will be required to pick up 20% of the CJRS wage costs, with the Government’s contribution, therefore, reducing to 60% (maximum of £1,875).
  • The CJRS arrangement is due to come to an end completely on 31st October 2020.

Next steps and observations

The announcement demonstrates that the Government is keen to continue to support businesses and also help get individuals back to work as smoothly as possible.

Unlike other countries, who have boosted unemployment benefit (and seen significant increases in unemployment), the UK has focussed on reducing the need to make redundancies by utilising the CJRS scheme, which has kept unemployment lower.

The gradual changes announced by the Chancellor will help employers manage costs but it will be important that employers also plan ahead by reviewing workforce strategy, reward and how their business is going to operate in a new environment given the altered climate we now find ourselves in.

The announcement does, however, make an already complicated arrangement (anyone who has done the calculations for CJRS will have the experience to back this up!) more complex. Areas that will need careful attention include:

  • The need to assess the grant claim over different pay periods (weekly / monthly);
  • Being able to identify qualifying employees, particularly given the introduction of the Flexible Furlough;
  • Assessing the interaction with the reduction in Government contribution from 80% to 70% and then 60%.

It is expected that further detail will follow to help employers carefully navigate the changes and we will be supporting employers with their calculations, strategy and business assessments as we move out of the Covid-19 lockdown.

As part of these details, it is also hoped that further guidance will be provided on the interaction between PAYE/NIC deferrals and the CJRS arrangement – our recent article provided an update on this following discussions with HMRC.



Mazars LLP