More changes to the furlough scheme announced

The Chancellor announced further changes to the Coronavirus Job Retention Scheme last Friday, 29 May 2020. We set out below a summary of the changes and the impact which these will have on employers.

Coronavirus Job Retention Scheme (CJRS)

  • Part time working

From 1 July 2020, employers will be able to bring furloughed workers back to work on a part time basis if appropriate. Workers will be able to work as much or as little as the business needs, with no minimum time during which they must be on furlough for their employer to claim under the CJRS. However, if workers are unable to return to work or employers do not have work for them to do, they can remain on furlough and the employer can continue to claim the grant (on a tapered basis-see below) for their full hours under the existing rules.

Businesses will need to agree the hours and shift patterns on which workers return to work and will be responsible for paying their wages in full while they are in work - including paying the tax and National Insurance Contributions (NICs) due on those amounts. Employers can still receive a grant under the CJRS for any of their normal hours when the workers are on furlough and not working. Any working hours arrangement agreed between the employer and worker must cover at least one week and be confirmed to the worker in writing. Employers should therefore start to prepare updated letters to send to staff currently furloughed to set out any new working patterns and arrangements which will apply from 1 July 2020. 

  • Closed to new entrants

Importantly, claims under the CJRS from July onwards will be restricted to employers currently using the scheme and previously furloughed workers. The CJRS will therefore close to new entrants on 30 June. In view of the need for any furlough period to last a minimum of 3 weeks, this means that the final date by which an employer can furlough a worker for the first time will be 10 June. Employers will therefore need to ensure any workers they wish to furlough and claim for under the CJRS have been placed on furlough leave by 10 June.

  • Level of government support

From 1 August, the level of government grant provided through the CJRS will be slowly tapered to reflect the fact that people will be returning to work. Any individuals who are furloughed would continue to receive 80% of their wages up to £2500 during the time they are on furlough. However, from 1 August, whilst the government will continue to contribute  80% of wages up to a cap of £2,500 per month (with the cap being proportional to the hours not worked), employers will start to pay the employer NICs and pensions contributions on the furlough pay.

From 1 September, the government’s contribution will reduce to 70% of wages up to a cap of £2,187.50 per month. Employers will have to pay the additional 10% along with the employer NICs and pension contributions.

From 1 October, the government’s contribution will reduce to 60% of wages up to a cap of £1,875 with employers paying the additional 20% along with the employer NICs and pension contributions.

The scheme will close in its entirety on 31 October 2020.

  • How to claim

When claiming the grant for furloughed hours under the CJRS, employers will need to report and claim for a minimum period of a week for grants to be calculated accurately across working patterns (although employers can choose to make claims for longer periods such as on monthly or two weekly cycles if preferred). Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and the actual hours worked.

From 1 July claim periods will no longer be able to overlap months, therefore employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this going forward.

Employers will have until 31 July to make any claims in respect of the period to 30 June, and will be able to make their first claim under the new scheme from 1 July.
Further information about how to calculate claims will be available by 12 June.

Self-Employment Income Support Scheme

As well as the changes to the CJRS, the government has also announced an extension to the support in place for the self-employed, with those eligible being able to claim a second and final grant in August 2020 worth 70% of their average monthly trading profits. This will be paid out in a single instalment covering three months’ worth of profits and capped at £6,570 in total. Individuals do not need to have claimed the first grant to claim the second grant.

Individuals can continue to apply for the first grant until 13 July 2020 (being a grant worth 80% of their average monthly trading profits, paid in a single instalment covering three months’ worth of profits and capped at £7,500 in total). Applications for the second grant will open in August.

The eligibility criteria will remain the same for both grants, namely that the individual:-

  • has submitted a Self-Assessment tax return for the tax year 2018-19;
  • continues to trade in 2019-20 and intends to keep trading in 2020-21;
  • carries on a trade which has been adversely affected by coronavirus;
  • has average self-employed trading profits of no more than £50,000 and at least equal to their non-trading income.

Individuals will also need to confirm that their business has been adversely affected by coronavirus when applying for the second and final grant.


This information is for general information purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Please contact us for specific advice on your circumstances. © Shoosmiths LLP 2024.



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