Chancellor Rishi Sunak announces major furlough update – and this is what is means for employers



Chancellor Rishi Sunak has outlined further details on how the Government’s furlough scheme will continue to support jobs as more and more businesses begin to return to work.

The Coronavirus Job Retention Scheme – which sees the Government pay 80 per cent of an employees wage – has so far helped one million employers across the UK to protect 8.4 million jobs.

But further details have now been announced by the Government on how the scheme will continue to work over the next four months.

Mr Sunak said, from July 1, businesses will be given the flexibility to bring furloughed employees back part-time – a month earlier than previously announced.

But the wages of employees who have returned to work will have to be paid by individual firms which will set the hours and shift patterns for staff accordingly.

And from August, employers will need to pay a higher contribution to employees’ wage packets as Government support for the scheme is slowly reduced.

This means:

  • For June and July, the Government will continue to pay 80 per cent of people’s salaries up to £2,500 a month – with absolutely no contribution from the employer.

  • In August, the Government will continue to pay 80 per cent but employers will be required to pay National Insurance and pension contributions. This is estimated to be around five per cent of the gross employer costs the employer would have incurred had the employees not been furloughed.

  • In September, the Government will pay 70 per cent of wages – up to a cap of £2,190. While employers will be required to pay National Insurance, pension contributions and the 10 per cent of wages to make up to 80 per cent – a 14 per cent contribution from employers.

  • In October, the Government will pay 60 per cent of wages up to a cap of £1,875 while employers will pay the remaining 20 per cent of wages as well as National Insurance and pension contributions – which represents a contribution of 23 per cent.

The Chancellor – who also issued an update on the Government’s Self-Employment Income Support Scheme – said: “Our top priority has always been to support people, protect jobs and businesses through this crisis.

“The furlough and self-employment schemes have been a lifeline for millions of people and businesses.

“We stood behind Britain’s businesses and workers as we came into this crisis and we stand behind them as we come through the other side.

“Now, as we begin to re-open our country and kickstart our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world.”

Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.

Employees who believe they are not getting their 80 per cent share can also report any concerns to the HMRC fraud hotline.

Commenting on the additional changes to the Job Retention Scheme, Director General of the British Chambers of Commerce (BCC) Adam Marshall, said: “The Chancellor has listened to business communities and struck a careful balance that will help many firms bring furloughed staff back to work flexibly over the coming months.

“The gradual reduction in furlough contributions from the Treasury will give businesses additional time to rebuild their income streams and cash flows, and the decision to give businesses maximum flexibility to bring people back part-time will be appreciated.

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“The furlough scheme has helped companies preserve millions of jobs through lockdown, but many firms still face significant uncertainty ahead. On that basis, closing the scheme to new applicants in June feels premature, and risks undermining some of the work already done to preserve businesses and jobs.

“Over the coming months, government will need to be open to providing new and additional support for businesses and staff who are unable to get back to work for an extended period, especially in sectors of the economy facing reduced capacity or demand due to ongoing restrictions.”





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