Know-how

22-06-2020

Farewell Furlough - Update regarding the winding up of the Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme is paying the wages of more than a quarter of the UK’s workforce.  

Over 9 million employees and more than 1 million business have benefited, almost certainly saving (for now at least) millions of jobs and hundreds of thousands of business from bankruptcy.

Any business with a PAYE payroll scheme and a UK bank account has been able to claim under the scheme in respect of employees on all types of contract.  

The scheme, under which employers have been able to apply for government grants equivalent to 80% of furloughed employees’ pay (capped at £2,500 / month), has already been extended twice and is due to run until the end of October 2020.

This has come at a cost to the Treasury of £14bn a month.

Winding down the scheme

Until the end of June, there will be no changes to the scheme. However, firms will not be able to claim for any employee furloughed for the first time after 10 June (unless they are a parent returning from maternity or paternity leave).

From 1 July until 31 October, firms may choose to bring back furloughed employees on a part-time basis. They will pay part-timers in full for days worked and may continue to claim under the scheme for days not worked. Subject to a minimum aggregate furlough period of 1 week a month, it will be up to businesses to decide upon working hours or shift patterns.

Furloughed employees will still receive 80% of wages (up to £2,500 a month) until the scheme closes at the end of October. However, with effect from 1 August, firms will be required to pay the employer national insurance contributions and employer pension contributions on employees’ furlough pay. From September firms must pay 10% of furloughed employees’ pay, increasing to 20% from October.

 


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