Update Changes to the Covid Job Retention Scheme – otherwise known as the furlough scheme came into effect today the 1st September 2020.
This is the penultimate month of the government scheme.
Government will pay 70% of wages, up to a cap of £2,187.50 per employee.
- ER NICS and pension contribution
- PLUS 10% of the wages to make up 80% total up to a cap of £2,500 per employee.
For the average claim this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
More changes to the furlough scheme are coming in October – the last month of the scheme – resulting in increased costs being passed back to the employer.
Employers to contribute 20% of wages plus ER NICS Costs in October
* for the average claim this represents 23% of gross employment cost if employee had not been furloughed*
Many businesses have taken advantage of the “flexi-furlough” that has been permitted since 1 July 2020. This gave employers the flexibility to bring employees back from furlough part-time. The days worked are paid at 100% of salary by the employer. The days on furlough are paid under the CJRS by the government.
Flexi- furlough is a great way to phase employees back to work and to allow Employers to manage their costs and I expect many more to take advantage of it in the next few months.
BUT it is important that any changes to the furlough is agreed in writing as it can be seen as change to terms and conditions of employment. We always recommend in such cases these changes are put in writing and agreed by both the employer and the employee.
If you need help with any of this, please get in touch