The furlough scheme introduced by the UK Government at the start of the coronavirus pandemic has been extended until the end of October 2020. However, businesses are expected to contribute more as the scheme draws to a close.
- August: businesses will be expected to cover national insurance and pension contributions of workers on the Coronavirus Job Retention Scheme. For the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
- September: businesses will have to cover 10% of the wage costs of furloughed workers on top of NI and pension contributions. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
- October: businesses will have to cover 20% of furloughed workers wage costs plus NI and pension contributions. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.
The extension and phased contributions announced by Rishi Sunak is to support the reopening of the economy, allowing businesses to prepare for employees to get back to work.
From 1 July 2020, employers will be able to bring furloughed workers back to work on a part-time basis if appropriate and safe to do so. The changes to the Coronavirus Job Retention Scheme allow businesses to continue to claim for those hours not worked.
However, if workers are unable to return to work or employers do not have work for them to do, they can remain on the furlough scheme, and the employer can continue to claim the grant (on a tapered basis-see above) for their full hours.
Businesses will need to carefully assess their situation to understand if they can reopen and operate under social distancing requirements.
It continues to be an uncertain time for everyone and furloughed employees, who have possibly been out of touch with broader business decisions, may feel anxious about their working hours and financial situation as a result of these new changes.
Businesses should start preparing for the latest changes and entering into conversations with their employees about the hours and shift patterns they expect employees to work over the coming months.
For more information on coronavirus measures for UK businesses, visit our COVID-19 page.
If there is anything we can do to help you manage your current financial situation, please call us on 0121 550 8525. We’ll be happy to talk you through some options based on your individual needs.
Please note that during this time, we are experiencing a high number of enquires. We are responding to everyone; however, it may take longer than normal. We appreciate your patience.