13 May 2020
There’s been concerns amongst employers, employee representatives and commentators for a little while now about what happens when CJRS ends. Following the Chancellor’s announcement on Tuesday 12 May, we now have some idea.
As with many decisions and their announcements during the current crisis, we have the headlines, without having all of the details at this stage; which are promised by the end of May. What we know is that the scheme as it stands is being extended until the end of July and after that there will be a kind of half-way house period between 1 August and 31 October, wherein employers will be asked to bear a greater share of employee costs and part-time returns to work for individuals will be permitted.
The timing of the announcement is critical, as clearly no plans could be made until the Prime Minister had announced the constraints under which lockdown is to be lifted. Whilst there is no definite timescale on this, it became likely that across many businesses a return to work would not be possible by 30 June, so an extension to CJRS would be needed to avoid a rush to lay-off workers. It should be noted that if 100 or more redundancies are being considered by an employer, the consultation must be at least 45 days, meaning that employers who thought that there would need to be redundancies when the CJRS ended would need to be giving notice this week. That has been avoided.
The cost of CJRS has been enormous and, as each week passes, there is increasing pressure to reduce the cost and to get the economy moving back towards pre-Covid-19 levels. However, it has become clear that balancing supply and demand in certain areas of the economy needs to be done carefully, and creating capacity by re-introducing furloughed workers needs to be matched by increases in demand. Whether or not the three month transition period will be sufficient, it’s hard to tell at the moment, but at least the recognition that such a period is required is a big step in the right direction.
There has been an underlying cautiousness in the conduct of the Government's schemes to support businesses through the Covid-19 crisis, which has been tempered by the feedback received during their initial periods of operation to make them more workable. We must hope that, when the further details are announced, they are not too complex and not too difficult for businesses to put into action.
We will be analysing future details and commenting on how they may be best put into practice, keeping you updated as soon as we receive more information.
For more details on the CJRS, or to have a more in depth conversation in relation to your current position and recovery through the crisis, please contact me or speak to your usual UHY adviser. If you do not already have a UHY adviser, you can contact an expert at your nearest office through our contact us page.
