What will happen when the CJRS ends?

21st Sep 2020
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COVID-19 was officially recognised as a pandemic on 11th March 2020, and since then our lives have been turned upside down. The Coronavirus Job Retention Scheme (CJRS) was announced just nine days later on 20th March in a bid to help employers and businesses across the UK.  

Fast forward to six months later, and little did we think that the CJRS would still be in place. At an estimated cost of £14 billion per month, the scheme is unsustainable in the long term, and will officially come to an end on 31st October 2020. 

When the scheme was extended until October, employers were promised that they would not face a ‘cliff-edge’ withdrawal of funding. Instead, the scheme has been winding down gradually over the past couple of months with a large portion of furloughed employee wage costs still being met by the government. 

However, the end of the scheme is fast-approaching, and employers need to decide to either: 

  • Bring employees back to work on their normal hours  

  • Reduce employees’ hours  

  • Terminate their employment 

The unfortunate truth is if you cannot afford to pay your employees, you will need to terminate their employment. A recent study estimated that the UK was likely to see around 450,000 redundancies this autumn alone. It warned this figure could exceed 735,000 if redundancy notifications continued to rise. 

If a worker loses their job and is entitled to redundancy pay, this should be calculated based on their pre-furlough wages, and firms cannot use the money from furlough to subsidise redundancy packages. 

Although the furlough scheme is set to end in October, the government has introduced a new Job Retention Bonus Scheme, which seeks to incentivise employers to hold off on redundancies. This is a one-off payment to employers who have availed of the CJRS for each furloughed employee who remains continuously employed until 31st‌‌‌ ‌January 2021. 

To be eligible, employees will need to earn at least an average of £520 per month for November, December and January, they must have been furloughed at any point and legitimately claimed for under the Coronavirus Job Retention Scheme, and they must have been continuously employed up until at least 31‌‌‌st ‌January 2021.  

Employers will be able to claim the bonus from February 2021 once accurate RTI data to 31‌‌‌st ‌January has been received.  

Register for our upcoming webinar to find out more about the end of the CJRS, the Job Retention Bonus Scheme and Redundancies. Places are limited – click here to book your place now.  

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