Updates to the Coronavirus Job Retention Scheme

As the chancellor announced the extension to the Coronavirus Job Retention Scheme (CJRS) and that there would be some adjustments, we have eagerly anticipated more detailed guidance on the changes. Thankfully, these have been released well ahead of July to give us time to adapt systems and processes to capture the new changes.

What are the changes to the Coronavirus Job Retention Scheme (CJRS)?

  1. From July 1st, you can now bring furloughed employees back to work part-time – you pay for when they work and the CJRS will pay 80% of the employee’s regular pay up to £2,500 when they are furloughed.
  2. The complicated bit – you need to keep a record of what hours they work and what hours they are furloughed.
  3. From August 1st, the government will no longer contribute to the Employers’ NI and Pension aspects of the scheme – they will pay only 80%.
  4. From September, furlough pay will drop to 70% of employee regular earnings and the cap will be reduced to £2187.50.
  5. From October, furlough pay will drop to 60% of the employee’s regular pay up to a cap of £1,875.

6. In both September and October, the employer is liable for the top up to ensure the employee is paid 80% of their normal pay up to a maximum of £2,500.

What this means in practical terms

In practical terms, this means things are going to get more complicated and more expensive for businesses. But a positive note is that employees are not subject to the current ‘all or nothing’ furlough situation which will be a relief to many.

The table below shows how the CJRS will change over the coming months.


Payment TypeJulyAugustSeptemberOctober
Furlough pay80% up to £2,50080% up to £2,50070% up to £2,187.5060% up to £1,875
Employer NIC and Employer Pensions from the GovernmentEmployer NI and Employer Pension on furlough pay onlyNo contributionNo contributionNo contribution
Employer contribution to wagesOptionalOptional10% up to £312.5020% up to £625
Total employee pay80% up to £2,50080% up to £2,500 and 100% for hours worked80% up to £2,500 and 100% for hours worked80% up to £2,500 and 100% for hours worked


From a recording perspective, employers “must keep records of how many hours your employees work and the number of hours they are not working or furloughed”. This means employers will need to record:

  • Hours per month the employee is furloughed
  • Hours per month the employee is working and therefore receiving 100% of pay
  • Hours per month the employee is on holiday and therefore receiving 100% of pay

Note that we refer to months here as the guidance states that employers cannot claim over one calendar month – the minimum claim period is 7 days.

Important features of the CJRS scheme

The following are items that should be considered by all employers accessing the CJRS:

  1. You cannot furlough more employees in July than you have in the previous pay periods – you are capped at the highest number of furloughed employees between March – June.
  2. If your employee had not been furloughed before the 10th June, they cannot be included in the claim as they had to be furloughed for at least 3 weeks by the 1st July.
  3. From the 1st August, the cost of furlough for the employer will increase – by removing the ability to add Employers’ NI and pensions to the claim, this meant, for furloughed workers, the government were covering the entire cost of the furlough – this will change and will mean financial pressures for some businesses.
  4. A really important point is that you do not need to place all employees on furlough, and you can continue to fully furlough staff beyond the 1st July and not bring them back to work.

What about casual or flexible workers?

The payment to casual/flexible staff has been very complicated to work out for many employers as without a set salary, the payment has been based on the average of the last 12 months up to the end of March or the same pay period in the last year – whichever is higher.

If flexible furlough is used, this means that for employees who work variable hours, their ‘usual hours’ is not based on the hours you predict that they would have worked in the claim period if they had not been furloughed. Nor can you simply agree the usual hours with an employee in their flexible furlough agreement.

Instead, you have to calculate their usual hours by looking backwards at the usual hours they worked last year. You must, therefore, calculate usual hours based on the higher of either:

  • the average number of hours worked in the tax year 2019 to 2020
  • the corresponding calendar period in the tax year 2019 to 2020

You can find guidance on the different scenarios covered by the new scheme here.

What actions do I need to take as an employer?

  1. Consider if you will use flexible furlough or if you will leave employees on full furlough
  2. If you are considering flexible furlough, determine how your system will help you record the hours worked and the hours furloughed (for example, should employees submit timesheets each time they work?)
  3. Create reports and identify the hours worked in each pay period for the last financial year as well as the total earnings (remember, this should be simple given the legislation changed last year to ensure you showed total hours worked on every payslip)
  4. Ensure you create a new furlough agreement for employees who are going to be flexibly furloughed and seek agreement to make the contractual change
  5. Adopt payroll processes to ensure you have the total hours worked, total hours furloughed, and the total holidays being taken by any employee on furlough to ensure the ‘top-up’ is applied correctly
  6. If cashflow is a concern, we recommend calculating the cost of furlough with the Employers’ National Insurance and pension contributions removed to ensure you are aware of the true cost of furlough from August onwards.

If you need help with furlough calculations, your payroll system configuration to support furlough and those returning to work, or if you need support with reporting to ensure you have the correct data for furlough calculations, please get in touch.

For more articles, tips, and advice, make sure to visit our blog.

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Written by : Laura Lee

Laura’s role as Head of Marketing sees her continually looking for new opportunities to tell the world how great Phase 3 is.

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