Changes to the Coronavirus Jobs Retention Scheme

The Coronavirus Jobs Retention Scheme has been a lifeline to British businesses fighting to survive the Covid-19 pandemic.

Faced with a £80billion bill, the UK Government is now looking to pass some of the cost back to employers.

From July 1 2020, businesses will get the flexibility to bring furloughed employees back part-time, a month earlier than previously announced.

Individual firms will decide the hours and shift patterns their employees will work on their return and will be responsible for paying their wages while in work.

To enable the introduction of part-time furloughing, and support those already furloughed back to work, claims from July onwards will be restricted to employers currently using the scheme and previously furloughed employees. 

The scheme will therefore close to new entrants on June 30, with the last three-week furloughs before that point commencing on June 10 – essentially giving business until next week to furlough any staff they wish to subsidise through the scheme.

What are the main changes, and when?

From August 2020, the level of government grant provided through the job retention scheme will be tapered to reflect that people will be returning to work. 

That means that for June and July, the government will continue to pay 80% of people’s salaries. 

In the following months, businesses will have to contribute a share, but crucially individuals will continue to receive that 80% of salary covering the time they are unable to work.

The scheme updates mean that the following will apply for the period people are furloughed:

June and July

The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.

From August 1

The government will pay 80% of wages up to a cap of £2,500. 

Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.

From September 1

The government will pay 70% of wages up to a cap of £2,187.50. 

Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. 

For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.

From October 1

The government will pay 60% of wages up to a cap of £1,875. 

Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. 

For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.

The furlough scheme will close on October 31 2020.

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