Furlough changes from August

The government have announced that Furlough will not be extended beyond October, but there are changes to the furlough scheme coming into force from this month.

Over 9.3 million workers have been placed on the furlough scheme, which has seen the government cover 80% of wages up to £2,500 a month, since its launch in March 2020. The initiative closed to new workers in June but those still on it can continue to get government funding until 31st October 2020.

FURLOUGH CHANGES FROM AUGUST:
From 1st August, employers must now pick up the bill for all employers National Insurance and pension costs from now on. This represents about 5% of employment costs for businesses. The government will continue to pay 80% of staff wages up to the £2500 a month cap.


FURLOUGH CHANGES FROM SEPTEMBER:

In September, the government’s contribution will fall to 70% of wages up to a cap of £2187.50 a month. This means employers will have to pay 10% of salaries to make up 80% of wages in total up to a cap of £2500. Employers will also need to continue to pay NI and pension contributions. For the average claim, this represents 14% of the employment costs.


FURLOUGH CHANGES FROM OCTOBER:

In October, the government’s contribution will fall again to 60% of wages up to a cap of £1875 a month. This means businesses will have to pay 20% of salaries to make up 80% of wages in total up to a cap of £2500. Employers will also need to continue to pay NI and pension contributions. It means employers footing the bill for 23% of employment costs.

The scheme will then end on October 31st.

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