How employers will share the cost of the furlough scheme

The Chancellor has revealed how employers will be expected to share the cost of the Coronavirus Job Retention Scheme for furloughed workers.

The scheme was introduced by the government earlier this year to enable employers to retain employees who they may otherwise have been forced to lay off during the coronavirus (Covid-19) pandemic. Currently, the scheme allows employers to claim 80% of furloughed employees’ wages, National Insurance (NI) and pension contributions.

The Chancellor, Rishi Sunak, recently extended the furlough scheme until the end of October. At the time, he indicated that employers would be expected to share the cost of the scheme and that furloughed workers would be able to return to work on a part-time basis in the future. The following changes to the scheme have now been confirmed:

• From 1st July, furloughed employees will be able to return to work on a part-time basis. Employers will be able to claim 80% of the wages, employer’s NI and pension contributions for the proportion of contracted hours that furloughed employees do not work during this time.
• From 1st August, employers will have to pay the employer’s NI and pension contributions for all their furloughed employees. The scheme will continue to cover 80% of furloughed workers’ wages, capped at £2,500 per employee per month.
• From 1st September, the scope of the scheme will be reduced to cover 70% of furloughed workers’ wages, capped at £2,187.50 per employee per month. Employers will have to pay 10% of their furloughed workers’ wages and will continue to pay the employer’s NI and pension contributions for them.
• From 1st October, the scope of the scheme will be reduced further to cover only 60% of furloughed workers’ wages, capped at £1,875 per employee per month. Employers will have to pay 20% of their furloughed workers’ wages and will continue to pay the employer’s NI and pension contributions for them.

The Chancellor has also confirmed that the Coronavirus Job Retention Scheme will conclude at the end of October.

To learn more about what the coronavirus crisis could mean for your business and to stay up to date with the latest news, take a look at our small business coronavirus hub.