Government Announces Changes to Job Retention Scheme

Jun 2, 2020
Author: Simon Bladen
Simon is one of the firm's Audit Partners. Simon is responsible for looking after the firm’s legal, charitable and not-for-profit clients.
furloughing staff

Government Announces Changes to Job retention Scheme

At a recent briefing, the Chancellor Rishi Sunak outlined how employers will shortly have to start sharing the cost of the Coronavirus Job Retention Scheme.

Workers can return to work from the start of July on a part-time basis, but companies will have to pay 100% of the wages for the time that employee spends working. So, for example, you could bring an employee back for 2 days a week and the employer would pay the employee for those 2 days and the furlough scheme would cover the other 3 days.

The Chancellor also announced that the scheme would start to be tapered from August and would finish completely at the end of October.

From August employers will pay National Insurance and Pension Contributions. In September employers will pay 10% with the government contributing 70% with a cap of £2,190 a month. In October the employer contribution will increase to 20% with the government paying 60% with a cap of £1,875. At the end of October, the scheme will finish.

It should also be noted that there can be no new entrants to the furlough scheme after 10 June. So any employee who has not been furloughed by then will not be able to access the scheme after this date. We would encourage all firms to review their furlough position by this date to ensure they don’t get caught out subsequently.

There will be no changes to the scheme by sector, which has disappointed those in industries more heavily impacted by COVID-19. However, the government is trying to carefully balance the support required for the economy against the huge cost of providing this support. Hopefully, this more gradual withdrawal will help the economy to pick up as consumer demand returns.

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Simon Bladen