Furlough – The Next Steps
Recognising that businesses have been through an “incredibly difficult time”, the Chancellor has revealed how the slow introduction of the employers’ CJRS contribution will work.
The furlough scheme will continue in its current guise, paying 80% of employees’ wages up to £2,500 with no employer contribution. But from August employers will be expected to pay a “modest contribution”.
Employers will only have to cover national insurance and employer contributions, which accounts for 5% of total employment costs.
The main change comes into force from September, when the government furlough contribution drops from 80% to 70%, with the employer having to pick up the 10%.
Then in October, the final stage of the furlough scheme, employers will have to pay 20%, with the government’s contribution shrinking to 60%. After this, the government contributions will finish and the scheme will come to an end.
Although employers will have to prepare for the inevitable end of the scheme, the Chancellor has listened to large and small businesses’ request for a more flexible furlough.
As announced earlier this month, a new element of furlough 2.0 is to enable workers to return part-time whilst still being under the scheme – and this aspect will arrive one month earlier than originally planned, from 1 July.
The Chancellor used the example of how a furloughed worker could return for two days and would be paid as normal, while the government would cover the other three days.
The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three week period prior to 30 June.
This means that the final date by which an employer can furlough an employee for the first time will be 10 June, in order for the current three week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.
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