Furlough: how employers’ contributions will change from August

On the 29th of May, Chancellor Mr. Sunak confirmed the extension of the Coronavirus Job Retention Scheme until the end of October. From the 1st of July, there will be greater flexibility in order to facilitate the transition with which employers and employees will return to work. Employers will have the chance to bring furloughed employees back part-time. Accordingly, employers will be responsible for paying worked hours. 

In August the UK government will still pay 80% of the wages up to a cap of £2,500, but businesses will have to contribute towards employer National Insurance (ER NICS) and pension contributions. On average, it represents 5% of gross employment costs, if the employee had not been furloughed.

In September the government will pay 70% of the wages, up to £2,187.50. Employers will contribute towards employer National Insurance (ER NICS) and pension contributions, as well as 10% of wages, for a total of 80% and up to £2,500. On average, it represents 14% of gross employment costs, if the employee had not been furloughed.

In October the government will pay 70% of the wages, up to £2,190. Employers will contribute towards employer National Insurance (ER NICS) and pension contributions, as well as 20% of wages, for a total of 80% and up to £2,500. On average, it represents 23% of gross employment costs, if the employee had not been furloughed.

Coronavirus Job Retention Scheme will end at the end of October

From August 2020, the UK Government will demand that employers start bearing part of the cost of the employees’ salaries in furloughed status. In August, employers will start to pay National Insurance and pension contributions. On top of this, as of September, employers will also pay 10% of wages followed by 20% in October. 

However, workers will keep receiving the same level of support as they do now (80% of their salary up to £2,500), thanks to the joint effort of the UK Government and employers. 

At the end of October, after eight months of government support, the scheme will officially close. Employers’ claims under the scheme have reached £15bn so far, however, the scheme is expected to cost a total of around £80bn, or £10bn a month.