News Flash – Employers to start contributing to Furlough Scheme
Chancellor Rishi Sunak has announced this afternoon that the Government will require employers to start contributing towards their employees’ ‘wage costs’ under the Coronavirus Job Retention Scheme (Scheme) from 1 August 2020, as follows:
- There will be no change to the Scheme contribution levels until the end of July. The Scheme will continue to cover up to 80% of wage costs of furloughed employees, up to a maximum of £2,500 per employee per month.
- From 1 August, the Scheme will continue to cover up to 80% of wage costs. However, employers will be required to pay National Insurance and employer pension contributions which, Mr Sunak estimates, amounts to about 5% of overall wage costs.
- From September, employers are expected to contribute 10% of employee wage costs and the Scheme will cover the remaining 70%.
- In October, employers will be asked to contribute 20% of employee wage costs, and the Scheme will cover the remaining 60%.
To allow businesses to kick-start their operations, employers will be allowed to bring back furloughed employees on a part-time basis from 1 July (rather than 1 August, as previously announced). Employers are expected to pay their part-time furloughed employees in respect of any days worked in the usual way. In other words, if a furloughed employee is asked to work 2 days per week, the employer will pay that employee in respect of those 2 days, and the employer can apply for a grant under the Scheme in respect of the remaining 3 days (assuming the furloughed employee is otherwise employed on a full-time basis).
The old Scheme is due to close on 30 June, to allow the Government to introduce a more flexible Scheme from 1 July. Employers have been given a deadline of 10 June to register any new employees on the old Scheme. The ‘flexible’ Scheme is set to close at the end of October with no further extensions announced.
We will provide further updates as more details are revealed. If you require advice/support on any aspect of the above or on any other employment matter in the meantime, please do not hesitate to contact Jonathan Bruck.