Employers to contribute to furloughed staff costs from August

The Government has announced that employers will be expected to contribute to their furloughed workers costs from August under changes to the Coronavirus Job Retention Scheme.

The Chancellor of the Exchequer, Rishi Sunak, stated on 29th May that taxpayer commitments to the furlough scheme will be tapered down in the coming months.

He said there was “broad consensus” that the Coronavirus Job Retention Scheme “cannot continue indefinitely”.

Consequently, the Chancellor outlined changes to the furlough scheme that will affect the UK’s small business community from August. The Government will continue to cover the full 80% of wages through June and July.

From August, employers will be asked to pay the National Insurance contributions (NICs) and pension contributions of staff. This will equate to 5% of total employment costs, on average.

In September, employers will be asked to pay 10% of employee wages, with taxpayers continuing to pay the remaining 70%.

During October, the final month of the furlough scheme, employers will be asked to pay 20% of employee wages, with taxpayers covering the remaining 60%.

A summary of the furlough scheme is available to watch here:

Flexible furlough options

From 1st July, employers will be given flexibility to decide on alternative working arrangements for their staff.

Businesses will be able to bring employees back to work for any period of time and any shift pattern required.

Wages earnt during these working hours will be paid for by employers, with the remainder of monthly wages continuing to be paid by the Government up to 80% in July and August, 70% in September and 60% in October.

Deadline for Coronavirus Job Retention Scheme announced

HMRC has also updated their guidance and has said the scheme will close to new entrants from 30th June.

After this point, an employer will only be able to furlough their employees that have been furloughed for a full three-week period, which must have arisen before 30th June.

This effectively means that the deadline to furlough an employee for the first time will be 10th June, in order for the current three-week furlough period to be completed by 30th June. HMRC also announced that employers will have until 31st July to make any claims in respect of the period to 30th June.

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Date published 29 May 2020 | Last updated 10 Jun 2020