The Government furlough scheme has officially entered its second phase today (1 July), bringing with it some important changes that will affect both businesses and employees going forward.
Since it was introduced back in March of 2020, the Job Retention Scheme has helped over 8.4 million workers remain in employment during the coronavirus pandemic, costing an eye-watering £100bn for the Treasury.
Businesses who felt most at risk were able to apply for the scheme, where the Government would then pay 80% of staff wages to stay at home, on the condition no one does any work for their employer.
What are the new changes to furlough?
From 1 July, the scheme enters its next phase and employers will begin playing a much bigger part in contributions to the 80%.
According to guidelines set by HMRC, the following changes will be made:
- July - employers can now bring furloughed employees back to work for any amount of time and shift pattern, all while being able to claim CJRS grant for hours not worked. The Government continues to pay 80% of wages up to a cap of £2,500, along with employee’s National Insurance and pension contributions.
- August - the Government pays 80% of wages up to a cap of £2,500, however, employers will then have to pay the employee's National Insurance and pension contributions.
- September – the Government pays 70% of wages up to a cap of £2,187.50, but the employer pays the employee's National Insurance and pension contributions, as well as the remaining 10% of wages to make up the full 80%.
- October – the Government pays 60% of wages up to a cap of £1,875, but the employer pays employee's National Insurance and pension contributions, and the remaining 20% of wages to make up the full 80%.
When does the furlough scheme end?
The Government furlough scheme ends on 31 October 2020, with businesses and employees returning to normal.