28 Aug 2020
For many employers, August was the start of an important period of post-coronavirus economic recovery. Now, as we step into September, you need to be aware of upcoming changes to the Job Retention Scheme.
Job Retention Scheme Changes
Furlough so far…
The Coronavirus Job Retention Scheme was put in place to support employers. Those who weren’t able to operate as normal due to the pandemic received financial aid.
The scheme came into effect on 20th March, and since then 1.16 million employers have taken advantage of it. These business owners have furloughed all, or part, of their workforce. The scheme allows employers to claim 80% of employee wage costs, to a maximum of £2,500 per employee, per month.
Until 1 August, this meant claiming this portion of the employee’s wages, and employee National Insurance and employer pension contributions.
From this date firms began contributing to furloughed workers’ wages. This will continue in stages until the scheme ends. The first phase of contributions, beginning on 1 August 2020, required employers to pay employee National Insurance and employer’s pension contributions of furloughed workers’ wage costs in relation to the hours that the worker does not work.
The September changes…
Changes to the Coronavirus Job Retention Scheme mean that further contributions from employers are needed from September. The 80% grant paid by the Government has continued at a cap of £2,500 until the end of August. However, from 1 September, the Government’s grant has decreased to only cover 70% of furloughed employees’ wages. This is at a decreased cap of £2,187.50.
Further changes will occur in October when the Government will only cover 60% of furloughed employee wages at a cap of £1,875.
Now that government grants have begun to decrease, you must top this up. Furloughed employees still need to receive 80% of their wages up to £2,500. For example, a 70% grant up to £2,187.50 will attract a 10% top up from you to a maximum of £312.50.
You will also need to continue paying employee National Insurance and employer pension contributions. This applies not only to August but September and October as well.
When the scheme ends…
The furlough scheme is coming to an end on 31 October. You need to make sure that you are keeping up to date with its changing structure. If you plan to keep employees on furlough until the end of the scheme, you need to keep up with these changes. You must ensure that the pay your furloughed staff receive accurately reflects the intentions of the scheme, as explored above.
If you need further guidance on the Job Retention scheme changes, or have an ongoing furlough issue, speak to one of employment law experts today on 01455 858 132.
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