The Coronavirus Job Retention Scheme (CJRS) is set to end on 31 October 2020.
Summary of Government Furlough Scheme
Throughout recent months, employers with furloughed employees have seen the gradual tapering of government contributions:
- In July 2020, the government paid 80% of wages up to a cap of £2,500, plus employers' National Insurance Contributions and pension contributions.
- In August 2020, the government-funded 80% of wages up to a cap of £2,500 and employers were required to pay national insurance, pension contributions and any part-time hours worked.
- Throughout September 2020, the government will continue to contribute towards 70% of wages up to a cap of £2,187.50 and employers are required to pay 10% of employee wages (up to £312.50) plus employer national insurance, pension contributions and any part-time hours worked.
- From October 2020, the government will contribute 60% of wages up to a cap of £1,875 and employers are required to pay 20% of employee wages (up to £625) plus employer national insurance, pension contributions and any part-time hours worked.
What next for Employers?
As October approaches, employers should already be considering the prospects of bringing employees back to normal working hours where there is sufficient workload.
Alternatively, employers should be, if not already, offering replacement contracts on different terms or, implementing a fair redundancy procedure.
Avoiding a "cliff-edge" effect.
With already a substantial increase in the number of redundancies and unemployment across many sectors in the UK, those lobbying to extend the CJRS (such as, business groups, trade unions, think tanks and opposition parties) are wanting to avoid a "cliff-edge effect" on 31 October 2020.
There are concerns that the new restrictions implemented on 22 September 2020 and an imminent threat of a second lockdown could lead to catastrophic implications for not only those at risk of losing their jobs but, individuals' mental health and dependant families across the winter months.
German-style wage Subsidy?
The government have made clear that indefinite furlough is not an option. However, as of 23 September 2020, Chancellor Rishi Sunak has raised speculation as to whether a new scheme to subsidise workers such as a German-style wage subsidy might be considered. Such a proposal might include employers paying workers' wages for their time at work only (at least 50%) and the government subsidising pay for when a worker has no hours.
In addition, other schemes are said to be "on the table" that would be considerably cheaper than the current CJRS. However, as of today's date, there has been no further announcements or guidance published; meaning the CJRS is set to end on 31 October 2020.
As the CJRS end date draws closer, employers must consider their options and plan appropriately to right-size their workforce and manage the legal and other risks that arise in the context of reorganisation.
We're here to help.
Be sure to follow our social media channels as we continue to keep you updated on the latest Furlough developments. If in doubt, please take advice. You can contact the Employment team at Myerson on 0161 941 4000 or via email at lawyers@myerson.co.uk.