The Coronavirus Job Retention Scheme
From 1st July, employers will have to contribute 10% to furloughed employees’ wages, as well as the National Insurance and pension contributions they are already paying.
The Coronavirus Job Retention Scheme (CJRS) has been one of the flagship financial policies during lockdown, allowing employers to place employees on furlough during the last challenging year, protecting jobs and helping keep businesses afloat.
The CJRS (or the ‘furlough scheme’) will remain unchanged for employees, but employers will now begin to make bigger contributions to furloughed staff’s wages during the final three months of the scheme. In July, the government will contribute to 70% of an employee’s wage capped at £2,187.50 per month, with employers now paying the additional 10%.
Government’s contributions are set to decrease again to 60% in August and September, with employers needing to pay 20% of wages for hours not worked before the scheme comes to an end on 30th September 2021.
The furlough scheme has supported many businesses to save jobs and reduce the number of redundancies in the height of the pandemic, but the ending of the scheme will likely cause uncertainty for many businesses and employees, with some sectors, like hospitality and retail, still yet to reopen as normal.
Businesses need to now consider how to restructure their workforce to welcome back furloughed workers, some of whom have been absent from the workplace since March 2020. Options may include the introduction of job shares and using holiday entitlement to ease employees back to work. Businesses may also look to introduce short time working or a temporary adjustment to hours which must be communicated and agreed with employees.
If redundancies need to be made, the process must remain as it was before the pandemic, with consultations and a fair selection process as part of the decision-making. Redundancies must be dealt with properly by the business, ensuring all employees are treated fairly and respectfully. As an employer, you must establish that the reason for the redundancy was the true and real reason for dismissal.