Furlough Contribution Update

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Furlough Contribution Update

Chancellor Rishi Sunak has provided a Coronavirus Job Retention Scheme, furlough contribution update.

From September 2020, Employers will see the current HMRC furlough contribution change from 80% down to 70%. This will reduce again in October to 60%.

The ‘Coronavirus Job Retention Scheme’, referred to by many as ‘furlough’, was created by the Government in March 2020, in a bid to support businesses to retain as many jobs as possible through the Coronavirus pandemic.

The scheme meant HMRC would support businesses financially by initially contributing 80% of an employees wage to a maximum of £2,500 per month. However there have been several updates in the weeks following, including strict processing procedures and eligibility.

In the most recent update (2nd June 2020), the Chancellor has also announced Employers will recommence paying national insurance and pension contributions from August.

Furlough Contribution Update: Percentage Breakdown of Wages for Furloughed Workers

June & July 2020
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. Scheme to new employers and new employees closes 30th June, so the last date you can put an employee not previously furloughed on furlough will be the 10th June (when you factor in 3 weeks of furlough status to be eligible).
August 2020
Employers will pay Employer National Insurance and Pension Contributions. For the average claim, this represents 5% of the gross employment costs.
September 2020
The Government will pay 70% of wages up to a cap of £2,187.50. Employers will pay 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.
October 2020
The government will pay 60% of wages up to a cap of £1,875. Employers will pay 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.

Please be aware there could be further changes to the scheme in the future, so keep checking on our website for the latest news, as and when they are announced.

For more details on the original scheme and objectives you can click here https://norihr.co.uk/employment-law-news/coronavirus-job-retention-furlough-scheme/

For information direct from the Government, click to visit https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme