Employers to pay more for furloughed workers

Employers to pay more for furloughed workers

Employers will need to contribute more to the cost of keeping their staff furloughed from 1 August.

The Coronavirus Job Retention Scheme (CJRS), which has protected millions of jobs, is due to close at the end of September.

Furloughed employees will still receive up to 80 per cent of their pay for unworked hours, up to a monthly maximum of £2,500.

Currently, the Government pays 70 per cent of unworked hours, with employers expected to pay the remaining 10 per cent, plus national insurance and employer pension contributions.

But from 1 August the Government contribution drops to 60 per cent, with firms expected to pay the remaining 20 per cent, plus national insurance and employer pension contributions. This contribution level will remain in place until the scheme ends on 30 September.

The Institute for Fiscal Studies says the bill for employers keeping a member of staff on furlough rose  from £155 per month in June, to £322 in July and £489 in August and September.

The furlough scheme was first introduced in March 2020 and is being gradually wound down. Employers may choose to top up their employees’ salaries from 80 per cent to 100 per cent, but they’re under no obligation to do so.

Workers can either be on full-time furlough, or work part-time and be furloughed for the hours not worked. Your employer will have to cover wages at the normal rate for any hours worked.

The furlough scheme was previously meant to end in March this year, but was extended until the end of April in December. But in the Budget in March, Sunak announced that the scheme would run until 30 September.

In June it emerged that employers could furlough workers who were self-isolating. This clause was omitted from official guidance about the scheme.

According to the most recent figures (up to 30 June):

  • About 1.9 million were on furlough (down from a peak of 5.1m in January)
  • About 28 per cent of employers had staff on furlough, down from 30 per cent at the end of May
  • There were more men on furlough than women
  • The accommodation and food services sector saw the biggest reduction in the number of jobs on furlough in June (down 291,900)
  • Arts and entertainment saw the highest rate of jobs being put on furlough in June

The government says 11.6 million jobs have been supported since the scheme began and from March 2020 to the end of September, the cost of furlough will come to about £66bn, according to estimates from the Office for Budget Responsibility.

However, the scheme has undoubtedly helped to save millions of jobs. At the start of the pandemic it was feared that more than one in 10 workers would become unemployed. Instead the unemployment rate is currently less than one in 20.

For help and advice with related matters, please get in touch with our expert team today.

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