CJRS revisions: The good, the bad and the ugly

On Friday 29 May, Rishi Sunak made further announcements on the Coronavirus Job Retention Scheme support available to employers from 1 July 2020 onwards.

The Good

Employers will be pleased to know that the scheme has been extended from 1 July 2020 to 31 October 2020, and that employees can start to return to work from 1 July 2020, earlier than had been previously expected. Over 2 million employers have accessed the scheme, according to HMRC statistics, protecting more than 8 million jobs during the lockdown period.  The level of support provided through the scheme is commendable, and the extension is good news.

It is also good news that the scheme will gradually reduce, so as to help employees back to work, help employers with funding the return, and wean employers off the support, rather than a cliff edge withdrawal.  The early notice of the intentions of the revised scheme is also helpful, so that employers can plan for the return, or any alternative arrangements they may need to make.  The current level of CJRS, at 80% of wages capped at £2,500 and associated NIC and pension contributions will continue to be available for June and July, longer than had originally been anticipated, and this will be welcome news to many – especially those who will struggle to return to previous capacity levels due to social distancing measures.

There is also flexibility within the changes, and employees will no longer need to be furloughed for a consecutive three week period in order for employers to be able to claim CJRS.

The Bad

Coverage under the scheme will be limited to those who are furloughed before 30 June. However, this is not the last date by which employers can identify and furlough employees. Under the revisions, employees will need to have been furloughed for the 3 consecutive weeks, by 30 June, in order to covered. Employers will therefore have to have furloughed as many employees as it plans to do so by 10 June at the latest, in order for the support to be available to these employees. The further detailed guidance will not be available until 12 June, so after this date. A leap of faith is required, before detailed calculations can be performed.

As we know from the current scheme, the computations are complex and have been through a number of iterations. With a gradual reduction in the support available, combined with the ability for employees to work part-time (and be paid full pay for this work) the methodology is likely to become more complex, not less.  With complexity comes risk and uncertainty. Employers only have until 31 July 2020 to claim for periods up to 30 June, and the emphasis is on getting claims right first time.

As the scheme support changes in August and through September and October, further complications will arise, coupled with the reduction in overall funding levels. This comes at a time when cash flow and balance sheet depletion will be really biting for some. Balancing the needs of the business to be operational, staff to increase their availability to work, but pressure on meeting the wage and associated operational costs will be a challenge. This at a time when there is still uncertainty over the availability of childcare, schools reopening, limiting reliance on public transport and maintaining social distancing in the workplace…

https://www.alvarezandmarsal.com/insights/cjrs-revisions-good-bad-and-ugly