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02 Jun 2020

Changes to the furlough scheme explained

On Friday (May 29), Chancellor Rishi Sunak announced some major changes to the Government's furlough scheme.

The scheme, which was set up in March following the outbreak of Covid-19 will end in October, and is being phased out gradually.

But what does that mean for you and your employees?

Here's what you need to know about how the scheme will now work:

  • From June 10, you will no longer be able to furlough an employee for the first time (so that they have completed the 21 consecutive days' furlough required by the scheme by June 30.
  • June and July: The Government will continue as before paying 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.
  • From July 1, businesses will be given the flexibility to bring furloughed employees back part-time. This is a month earlier than previously announced to help support people back to work. Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them - and will be responsible for paying their wages while in work.
  • August: The Government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • September: The government will pay 70% of wages up to a cap of £2,190. Employers will pay ER NICs and pension contributions and 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 the employer would have incurred had the employee not been furloughed
  • October: The Government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 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 the employer would have incurred had the employee not been furloughed.

For more details on the furlough scheme and other government support, click the button below.

Click here for more details