How is the furlough scheme changing from July 2020?

Blogs 30 Jun 2020

From 1 July 2020 the furlough scheme is changing, find out how with our guide.


The Coronavirus Job Retention Scheme (CJRS) was extended until 31 October 2020 to support employers with the transition back to work. From 1 July 2020, key changes will be in place to the scheme, including the introduction of flexible furlough.

The CJRS closed to new applicants on 30 June 2020, with the exception of employees returning from statutory parental leave after 10 June, or military reservists who have been in active service during the coronavirus outbreak, where they return to work after 10 June 2020. Employers will have until 31 July 2020 to make any claims for the period covering 1 March to 30 June 2020.

We explain how the furlough scheme will change from July, what you must do as an employer, and the key dates for your diary.

What will change to the furlough scheme on 1 July 2020?

Employees will be allowed work whilst on furlough to support the transition back to work. Employers will only be able to claim via the CJRS for employees’ wages for the periods where they haven’t worked.

For example, if your employee normally works five days a week and you decide to ask them to work two days a week, you will not be able to claim via the CJRS for these two days. You will only be able to claim for the three they don’t work.

For periods where an employee is on furlough and not working, until August 2020, employers can claim 80 per cent of normal wages, up to a cap of £2,500 per month, as well as employer National Insurance and auto enrolment pension contributions for these hours.

How do I claim under the new rules from 1 July 2020? Employers will be able to make their first claim under the new furlough rules from 1 July 2020.

  • For claim periods after 1 July 2020, employers will be required to submit the following details to HMRC:
    • The usual hours an employee would be expected to work, based on the number of hours the employee was contracted for at the end of the last pay period ending on or before 19 March 2020
    • The actual hours worked, or which will be worked
  • When claiming for unworked hours, employers will need to report and claim for a minimum period of 7 calendar days, unless a claim is being made for the first or last few days in a month.
  • Claim periods must not overlap months
  • The number of employees an employer can claim for in any claim period must not exceed the maximum number of employees they have previously claimed for through the CJRS

How long can flexible furlough last from 1 July 2020?

Until 30 June 2020, furloughed employees must stop all work for a minimum period of 21 days in order for an employer to claim their furloughed wages under the CJRS.

From 1 July 2020, flexible furlough agreements can last any amount of time, however the minimum period that employers can claim for must be a minimum of 7 calendar days.

If a previously furloughed employee started a new furlough period before 1 July, this furlough period must last for a minimum of 3 consecutive weeks, regardless of whether this period ends before or after 1 July.

For example, an employee on furlough from 22 June would have to continue this furlough until on or after 12 July, before being flexibly furloughed for any period. After 1 July, claim periods can’t be made across calendar months, so you would need to make a separate claim for the period up to 30 June.

If you are bringing back furloughed employees on reduced hours, you must agree the new working patterns as a temporary variation of the contract, if the existing contract does not allow you to do so. Agreements regarding work during furlough must be confirmed in writing under the terms of the CJRS rules.

How will the furlough scheme change after 31 July 2020?

Until the end of the furlough scheme on 31 October 2020, the following changes will take place:

August 2020
  • The Government will pay 80 per cent of wages up to a cap of £2,500
  • Employers will pay ER NICs and pension contributions
  • For the average claim, this represents 5 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed
September 2020
  • The Government will pay 70 per cent of wages up to a cap of £2,190
  • Employers will pay 10 per cent of wages to make up 80 per cent total up to a cap of £2,500
  • Employers will pay ER NICs and pension contributions
  • For the average claim, this represents 14 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed
October 2020
  • The Government will pay 60 per cent of wages up to a cap of £1,875
  • Employers will pay 20 per cent of wages to make up 80 per cent total up to a cap of £2,500
  • Employers will pay ER NICs and pension contributions
  • For the average claim, this represents 23 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed

What happens if an employer can’t afford to pay the required contributions for August, September or October 2020?

Furloughed employees are entitled to receive 80 per cent of their wages, up to a cap of £2,500, until the CJRS scheme ends on 31 October 2020. Contributions from the employer are mandatory.

You may need to remove employees from the furlough scheme and consider alternatives, such as short-term working or redundancies.

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