The Chancellor has announced plans to end the Furlough scheme on 31 October 2020, with Government contribution levels gradually reducing from 1 August.
From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time – this is a month earlier than previously announced. Employers will be able to decide the hours and shift patterns that employees work and will only be responsible for paying their wages while in work.
It is worth noting that, the scheme is expected to close to new employee entrants from 1 July 2020. Employers may therefore only be able to claim the grant income in connection with those employees furloughed for at least 3 weeks prior to 1 July 2020.
From August 2020, the level of Government grant provided through the job retention scheme will be slowly tapered down. For June and July the Government will continue to pay 80% of furloughed workers’ salaries. In the following months, employers will be asked to contribute an increasing share:
June and July: The Government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.
August: The Government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs.
September: The Government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs.
October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs.
The full detail behind the proposed changes is expected to be released later this week. For more information, or to discuss, please call a member of our payroll team, or email [email protected]