Employers to share costs of Coronavirus Job Retention Scheme

The government is currently paying 80% of workers’ salaries up to £2,500 a month for almost 8.4 million workers under its furlough scheme.

Earlier this month, the Chancellor announced that the scheme would be extended until the end of October, but that the government would ask employers to start sharing the cost of the scheme from August.

Setting the scene for the changes he announced, Rishi Sunak said businesses would need to become Covid secure and as “Britain returns to work we need to adapt the emergency programmes we put in place to bridge through the crisis”. He went on to say “As we reopen economy… the furlough scheme cannot continue indefinitely.”

He went on to explain that the furlough scheme, will remain open until October, but that employers would need to begin to contribute towards the wage costs of their staff.

So, in June and July the scheme will continue as before with no employer contribution.

In August, the government will continue to pay 80% but employers will need to cover the National Insurance and employers pension contributions amounting to 5% of employment costs.

In September taxpayers will pay 70% of the furlough grant with employers contributing 10%.

By October, taxpayers will be covering 60% and employers will contribute 20%.

The scheme will then close.

Flexible Furlough

The Chancellor also introduced the Flexible Furlough scheme , in place from July 1st.. Employers will have flexibility to bring employees back to work, paying them for the days they work with the furlough scheme covering the costs of the other working days in the week.

To introduce the new Flexible Furlough Scheme from July 1st, the old scheme  will need to close to new entrants from June 30. New employees must be placed on scheme by June 10.

Self Employment Income Support Scheme.

2.3million self-employed workers have received grants totalling £6.8bn under the Self Employed Income Support Scheme SEISS. This scheme gave the qualifying self employed a grant of 80% of their average monthly profits, up to £2,500 per month for the three months ending 31 May. The payment was made as a single instalment at the end of May.

Today, Rishi Sunak announced that the SEISS will be extended, with applications made in August covering the three months from June to August. To continue parity with CJRS the maximum amount of the grant will be £6,570, representing 70% of  average monthly earnings.

We will bring you further details as we receive them.

Chancellor’s statement 29 May 2020