What will furlough scheme employer contributions be?

Darnell Taylor
June 1, 2020

Business groups briefed on the new plans claim the emergency budget will have three key elements - funds to retrain workers laid off when the furlough scheme ends, huge extra infrastructure spending, and a plan to help British-based technology firms.

From 1 July, businesses will be given the flexibility to bring furloughed employees back part-time, deciding themselves both the hours and shift patterns they will work.

The Government's Coronavirus Job Retention Scheme is set to run until the end of October. By October, taxpayer contribution will fall to 60 per cent and employers will pay 20 per cent before the scheme closes at the end of the month. Employers will pay National Insurance and pension contributions and 10 percent of wages to make it up to 80 percent total up to the £2,500 cap.

Under plans to be announced by Rishi Sunak over the next few days, the support given by the furlough scheme will be cut back due to government concerns about its spiralling cost and the likely impact on the UK's growing public spending deficit. Employers will also be expected to pay national insurance contributions, which they are now exempt from, and employer pension contributions.

"The furlough and self-employment schemes have been a lifeline for millions of people and businesses", said Sunak, who is leading the United Kingdom government's economic response to the coronavirus pandemic.

Mr Sunak said the Coronavirus Job Retention Scheme will adjust so "those who are able to work can do so".

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From August, the level grant provided through the CJRS will be slowly tapered to reflect people returning.

"Without such assistance, and soon, many businesses will simply shut up shop, resulting in the mass unemployment the chancellor has sought to avoid these past two months", he said.

"Nobody wants to be at home on furlough, nobody wants to feel unable to contribute".

He said that for the average claim, this represents five percent of the gross employment costs the employer would have incurred had the employee not been furloughed.

Under the provisions, the government covers 80 per cent of salaries of furloughed staff, up to the value of £2,500 a month, in order to prevent companies having to resort to redundancies.

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