The UK government’s Coronavirus Job Retention Scheme (CJRS), announced 20
March 2020, to help businesses mitigate the impact of COVID-19 and
safeguard jobs, has been revised and amended throughout the crisis. The
CJRS will be phased out and will close on 31 October 2020.
After 1 July 2020, employers can elect to bring furloughed employees back
to work for any amount of time while still being able to claim CJRS grant
for the balance of any contracted hours which are not worked, i.e., a
part-furlough, part-work structure. This is intended to allow businesses to
facilitate a safe, phased return to work. (For details, see McGuireWoods’ “COVID-19 and Returning to Work: Employer Considerations.”)
The CJRS is now closed for businesses that have not already furloughed
staff, with the exception that employees returning from statutory parental
leave after 10 June 2020 can still be furloughed. The last date on which
existing registered employers can file claims under the CJRS for any period
ending on or before 30 June 2020, is 31 July 2020. Therefore, employers can
only claim for those employees previously furloughed for any period of at
least three weeks between 1 March and 30 June 2020. For example, if an
employee was furloughed for the whole of May and brought back to work for
June, they can be furloughed again up to 31 July. However, the number of
employees a business can furlough after 1 July cannot exceed the number of
employees furloughed in any previous claim made before 1 July 2020.
After 31 July 2020, the minimum three-week furlough period requirement will
be removed and employees can then only be on furlough for a minimum period
of seven days. Employers will be able to rotate employees flexibly on
furlough for one-week periods. As before, businesses will need to be
careful to make non-discriminatory decisions about which employees to keep
furloughed and which to bring back for any period.
From 1 August 2020, employers can exercise discretion to encourage
employees to return to work and employers will need to contribute a
proportion of the cost toward any furloughed employees’ pay. Until 31 July
2020, the government will continue to pay 80 percent of furloughed
employees’ monthly wages, up to the cap of £2,500 (CJRS cap) in the usual
way, but after 1 August 2020, employers will need to pay: (1) employer
National Insurance contributions (NICs); (2) pension contributions; and (3)
wages for any hours the employee works.
The grant claimed through the CJRS will then be reduced from the first of
each month after 31 August 2020, with a proportionate reduction in the CJRS
cap, as set out in the table below.
Employer liability for furloughed workers
Level of grant claimed under CJRS
1 August 2020 – 31 August 2020
Employer NICs and pension contributions
80% of wages, subject to the CJRS cap
1 September 2020 – 30 September
(a) 10% of wages subject to a cap of £312.50 for unworked
(b) Employer NICs; and
(c) Pension contributions.
70% of wages, subject to a monthly cap of £2,187.50 for
1 October 2020 – 31 October 2020
(d) 20% of wages subject to a cap of £625 for unworked
(e) Employer NICs; and
(a) Pension contributions.
60% of wages, subject to a monthly cap of £1,875 for
The cap for a claim under the CJRS will be proportional to the worker’s
hours not worked and for which a worker is furloughed, relative to the
worker’s normal working hours.
It remains to be seen, however, how the CJRS will be adapted in the event
of a second or third wave of COVID-19 or whether the CJRS will be phased
back in to offset longer-term economic challenges. Many employers are
likely to face difficult decisions about whether contributing to a tapered
furlough system will be financially viable and, as part of that risk
assessment, will need to prepare a costs-benefit analysis of potential
redundancies or restructuring. Employers should be aware that, from 31 July
2020, if it proves necessary to make furloughed employees redundant,
statutory redundancy payments are to be based on 100 percent of their
normal pay and not any reduced furlough pay received under the CJRS.
For advice on issues related to the CJRS, such as a decision-making process
on bringing back employees and related return-to-work issues or on business
restructuring generally, please contact
Dan Peyton or Adam Penman.
McGuireWoods has published additional thought leadership analyzing how companies across industries can address crucial business and legal issues related to COVID-19.