Phase 2 Job Retention Scheme

Coronavirus Job Retention Scheme (CJRS) – Phase 2 Begins 1 July

Now that HMRC’s guidance has been published on how the rules of CJRS Phase 2 are going to work, it is worth updating this blog to add some of the detail.

The new measures should aid the gradual return to work of many employees who have been furloughed under phase 1 of the CJRS.  Crucially, the new scheme will allow part-time working to give employers the flexibility to bring staff back to work gradually, whilst still being able to claim the CJRS grant for the remainder of employees’ normal working hours.

This is a significant diversion from the phase 1 scheme rules, so it requires a hard cut-off at 30 June to enable the transition.

A key factor of the new rules is that a CJRS grant claim will only be available post 1 July in respect of employees for whom a claim has been made under the phase 1 scheme.  This means that any employees who had not previously been furloughed must have been placed on furlough by 10 June at the latest if they are to qualify under phase 2 of the CJRS.  Note that exceptions to this rule have been announced for employees returning from parental leave and armed forces reservists.

How do the Phase 2 rules vary from the Phase 1 rules?

  • Furloughed employees will be allowed to work part-time.
  • From 1 July, there will be no minimum period of furlough for qualifying grant claims, but a minimum claim period of one week will be introduced (with exceptions for short periods at the start and end of months).
  • For flexible furlough (part-time working) grant claims, information will need to be submitted detailing the employees’ hours not worked in the period, together with the total number of hours they would normally work in that period (the difference being hours actually worked).
  • Claim periods will no longer be able to overlap month ends. This is required in order to be able to sensibly deal with the different rules applying within each month, commencing in July.
  • It is anticipated that there will be a deadline for grant claims of the end of the following month.
  • In respect of previously furloughed employees, if a new period of furlough commences after 10 June, but before 1 July, the flexible furlough rules cannot be utilised until the 21 day phase 1 qualifying period has ended. For example, if a new furlough period begins on 17 June, that employee can only commence part-time working on 8 July.  This has no impact on the cut-off for grant claim periods.
  • A potential trap to watch out for is that the maximum number of employees for whom an employer will be eligible to make a claim will be limited to the highest number of staff on any claim under the phase 1 scheme. Note that this is not necessarily the same employees, just a maximum number.

Phased withdrawal of the scheme

Measures are also being introduced to require employers to gradually make a larger contribution to the costs of employees retained under the furlough scheme.

  • From 1 July, employers can ask furloughed employees to work part-time, but as would be expected, the employer will have to pay the employees’ salaries (at full contractual pay rates) for their hours worked. The existing 80% (capped at £2,500) grant will continue to be paid in July for furloughed hours.  Note that the £2,500 cap will have to be reduced pro rata for furloughed hours as a proportion of total hours.
  • From 1 August, the CJRS grant will no longer cover the employer national insurance and pension contribution costs.
  • From 1 September, the employer will be required to bear the cost of 10% of furloughed employees’ salaries. The £2,500 cap will reduce by 10/80 to £2,187.50.
  • From 1 October, the employer will have to pay 20% of furloughed employees’ salaries. The £2,500 cap will further reduce by 20/80 to £1,875.
  • Phase 2 of the CJRS ends on 31 October.

If you have any questions or would like any advice on the second phase please contact Brian Jukes.