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COVID-19: Job Retention Scheme update

2nd July 2020

COVID-19: Job Retention Scheme update
This article was last updated on 2 July at 10:10.

As of 1 July the Coronavirus Job Retention Scheme has entered in to its second phase, which will eventually see the scheme close at the end of October and the changes which will start to come into effect from 1 July, including 'flexible furloughing'.

Under the scheme all claimant employees must have been on the scheme by 10 June.

With the second phase we will see:

  • Gradual introduction of employer contributions; and
  • Flexible furloughing arrangements.

Gradual introduction of employer contributions

The proposed changes include the following:

Month

Employer contribution

Government contribution

June/July

No additional employer contributions.

The Government will continue to pay 80% of the employee’s salary, capped at £2,500 per month,plus, the employer’s National Insurance and pension contributions (capped at 3%)

August

Requirement to pay the employer’s National Insurance and pension contributions (capped at 3%)

The Government will continue to pay 80% of the employee’s salary, capped at £2,500 per month.

September

Requirement to pay the employer’s National Insurance, pension contributions (capped at 3%), plus 10% of the employee’s furloughed pay

The Government’s contribution towards the furloughed pay will reduce to 70% of the employee’s salary, capped at £2,500 per month.

October

Requirement to pay the employer’s National Insurance, pension contributions (capped at 3%), plus 20% of the employee’s furloughed pay

The Government’s contribution towards the furloughed pay will reduce to 60% of the employee’s salary, capped at £2,500 per month.

Flexible furloughing arrangements

From July it will be possible for employees to work part-time, with the employer receiving some financial support. The intention is the employer will pay in full for the days the employee is working. The Government will fund the days the employee is not working, subject to the employer contributions above.

Under the proposed changes, furloughed workers will continue to benefit from the scheme until the end of October but by then, almost a quarter of their salary will have to be met by employers.

The scheme is expected to cost a total of around £80bn, or £10bn a month. The ICAEW has published useful commentary which is here.

The Government’s latest guidance is here.

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