The Furlough Scheme – All Change
Employers who still have employees on furlough need to be aware that the Coronavirus Job Retention Scheme changes again from 1 September and in particular the costs that employers have to pay to access the scheme will increase.
The changes are:
- for September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed
- for October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed
Employers will continue to able to choose to top up employee wages above the 80% total and £2,500 cap for the hours not worked at their own expense if they wish. Employers will have to pay their employees for the hours worked where they have been flexibly furloughed.
The scheme is still due to close on 31 October 2020. Whilst there have been various stories about a possible extension to the scheme for specific sectors e.g. the leisure and travel sector, there has been no indication from the government that the scheme will be extended so employers should continue to prepare based on a 31 October 2020 finish date for the scheme.
For those employers that have brought employees back from furlough or are planning to do so, they may be eligible to claim the Job Retention Bonus which is a one-off payment to employers of £1,000 for every employee who their employer previously claimed for under the scheme, and who remain continuously employed through to 31 January 2021. Eligible employees must earn at least £520 a month on average between the 1 November 2020 and 31 January 2021. Whether this will be enough to persuade some employers to hold off making redundancies and avoid the cliff edge, is still to be seen.
If you have any queries on the changes or any other aspect of the furlough scheme, please contact Matt Jenkin.