Government confirms changes to ‘flexible’ furlough scheme

The UK government has confirmed the latest set of changes to its “flexible” furlough scheme – dubbed CJRS V2 – ahead of its launch of the 1 July.

HM Revenue and Customs has set out the new guidance as the current version of the Coronavirus Job retention Scheme (CJRS) ends today (30 June). 

The updated guidance explains 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.

From 1 August 2020, the level of grant will then be reduced each month.To be eligible for the grant employers must pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed.

It also details that wage caps will be proportional to the hours an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours. 

A timetable for the changes is detailed below:

• 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

HMRC also explained that employers will still be able to top up employee wages above the 80% total and £2,500 cap for the hours not worked at their own expense, if they choose to do so. Employers will have to pay their employees for the hours worked.

In May, Rishi Sunak announced an extension of the government’s furlough scheme until the end of October.

Announcing the decision in the House of Commons on 12 May, he revealed “no changes whatsoever” will be made to the current scheme until the end of July.  

However he noted that from August to October the scheme will continue, for all sectors and regions of the UK, but with greater flexibility to support the transition back to work.