The UK government has announced that the Coronavirus Job Retention Scheme, one of the measures introduced to assist businesses during COVID-19, will be extended until October 2020.
We explain below what the scheme is, what changes have been made, and shed some light on what this means for employers and employees.
What is the Coronavirus Job Retention Scheme?
The Coronavirus Job Retention Scheme (CJRS) is a governmental measure designed to incentivise employers to pay the majority of employees’ salary through a government-sponsored grant. The scheme applies to employees who have been forced to stop working because of the coronavirus but who are still kept on the payroll, or otherwise known as ‘furloughed workers.’
An employer is eligible to claim 80% of their employees’ wages as well as any employer National Insurance and pension contributions.
How is the Coronavirus Job Retention Scheme changing?
Until the end of July, the scheme will continue as described above, meaning that furloughed workers cannot continue working for an employer.
But from August untill October of this year, the scheme will become more flexible, allowing employees to return to work on a part-time basis and ensuring that the government and companies share the cost of wages.
What does it mean for employees and employers?
Until October 2020, 80% of an employee’s regular wage will be guaranteed but the question of who pays the wage is subject to change. It was confirmed that from August both companies and the government will have to contribute to an employee’s wage.
It has not yet been decided what proportion of the wage will be paid by companies and what proportion by the government, but there are several theories being considered. The wage could be aligned with how many hours an employee works, or there could be a fixed percentage of the wage that is paid by the company and the government respectively.
In short, an employer will have to start considering their budget for their employees’ wages starting from August 2020.
The scheme is currently paying around 7.5 million employees, which is a quarter of the UK’s private sector labour force, and the grant have been used by 935,000 companies so far. Of course, the situation is constantly changing so the CJRS may be subject to amendments in the coming weeks and months.
But in the meantime, we remain available to answer any of your questions and provide legal support to your business operations if needed.