The furlough scheme changes from today - here’s what you need to know

Tuesday, 1st September 2020, 10:23 am
Updated Tuesday, 1st September 2020, 11:19 am
The UK government’s furlough scheme will come to an end in October (Photo: Shutterstock)

The UK government’s furlough scheme, which was put into place in March of this year to support employers who were not able to operate as normal due to the coronavirus pandemic, will come to an end in October.

However, there are certain changes to the scheme that will be made in September, explains Alan Price, employment law expert and CEO of BrightHR.

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Here’s what you need to know.

Furlough scheme changes

Since the furlough scheme came into effect, thousands of employers have furloughed all or part of their workforce and claimed 80 per cent of employee wage costs, up to a maximum of £2,500 per employee per month.

Until 1 August, employers had been able to claim the portion of the employee’s wages, together with National Insurance contributions and employer pension contributions.

Firms have now begun to contribute to the wages of furloughed workers’ wages. This will continue in stages until the scheme ends.

“Employers should be aware that further contributions from employers will be needed from September,” says Mr Price.

The 80 per cent grant paid by the Government will continue at a cap of £2,500 until the end of August.

The following will then apply:

September - the Government’s grant will decrease to cover 70 per cent of furloughed employee wages at a decreased cap of £2,187.50

October - the Government will cover 60 per cent of furloughed employee wages at a cap of £1,875

Employers will also need to continue paying employer National Insurance contributions and pension contributions for September and October.

Mr Price adds, “Another important detail that employers should be aware of is that once government contributions begin to decrease in September, employers must top this up to ensure that furloughed employees still receive 80 per cent of their wages up to £2,500.”

For example, a 70 per cent grant up to £2,187.50 will see a 10 per cent top up from employers, to a maximum of £312.50.