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Insight

COVID-19: Coronavirus Job Retention Scheme – Chancellor's update

Nick Thorpe
12/05/2020

Locations

United Kingdom

On 12 May 2020, UK Chancellor Rishi Sunak provided an update on the future of the Coronavirus Job Retention Scheme (CJRS) with a view to a measured winding down of employee furlough leave.

  The scheme was first announced on 20 March 2020, and provides a mechanism through which the government will cover 80% of the wages of employees while they are furloughed (up to a cap of £2,500 per month).
 
  • Guidance for employers is accessible – here
  • Guidance for employees is accessible – here
  • Guidance on calculating a claim is accessible – here
  • Guidance on making a claim is accessible – here
 
Headline announcements

In his update on the next stages of the CJRS, the Chancellor's most significant announcements were:

1. The scheme will be extended until the end of October 2020. 

The CJRS was previously set to close at the end of June 2020, but will now cover an eight-month period between March and October 2020.  

The extension is greater than had been expected, with reports published earlier this week suggesting that the scheme might only be extended until September.

2. The scheme will continue in its current form until the end of July, and in amended form between August and October.

The Chancellor was, however, clear in his message that the overall level of support available to employees would remain the same (i.e., 80% of wages, subject to a monthly cap of £2,500 per month) and that the CJRS will remain accessible to employers across all sectors throughout its lifespan.

This is again more generous than anticipated, with many commentators suggesting that grants under the scheme would be reduced to 60% of employees' earnings. However, from August it is possible that employers will need to share the wage costs of furloughed staff.

3. The scheme will be amended from August to make it more "flexible".

lthough detail is lacking, the Chancellor has suggested that the new, flexible version of the CJRS will include some degree of employer part-funding and will allow employees to return to work on a part-time basis, while still taking advantage of the scheme (which is currently not permitted under HMRC's guidance).

The Chancellor has indicated that detailed guidance setting out these proposals will be published at the end of May.
 

How we can help

Although this announcement provides only limited information, employers should nevertheless explore the application of the CJRS in light of this significant extension to its lifespan.

We are working with many businesses, across various sectors impacted by the government's recent measures, who are looking closely at whether they can take advantage of the scheme as part of a series of actions to protect their businesses. 

Please do call or email any member of the Fieldfisher employment team for more information on the CJRS and for advice on how your business can best take advantage of it.
 
 

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