Understanding Furlough Leave Scheme payments from 1st August 2020

Posted: 1st June 2020
Author: Sara Marshall

Rishi Sunak has announced changes to the amount of wages employers can recover under the Coronavirus Job Retention Scheme (CJRS) from 1st August 2020.

Currently, employers can place an employee on Furlough Leave under the terms of the, claiming back 80% of their employee’s wages (up to £2,500.00 per month), based on the employee’s wages as at 19th March 2020. On top of this, an employer can also claim back their employer National Insurance Contributions and the 3% auto enrolment pension contribution that they are required to pay.

From August 2020, the level of the grant will be slowly tapered to reflect that people will be returning to work:

  • In June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee does not work. If the employee is brought back to work under the flexible furlough leave scheme from 1st July 2020, employers will have to pay employees for the hours they work
  • In August, the government will pay 80% of wages up to a cap of £2,500 and employers will pay ER NICs and pension contributions for the hours the employee does not work.
  • In September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.
  • In October, the government will pay 60% of wages up to a cap of £1,875.00 for the hours the employee does not work. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.

We have summarised the position in this table below:

July August September October
Does the Government contribute towards employer NICs and pension contributions? Yes No No No
Government contribution to wages 80% up to £2,500 80% up to £2,500 70% up to £2,187.50 60% up to £1,875.00
Does an employer need to contribute towards employer NICs and pension contributions? No Yes Yes Yes
What does an employer contribute towards wages? Nothing Nothing 10% up to £312.50 20% up to £625.00
Employee receives 80% up to £2,500 per month

 

 80% up to £2,500 per month

 

 80% up to £2,500 per month 80% up to £2,500 per month

An early assessment of CJRS claims suggest that around 40% of employers have not made a claim for employer NICs costs or employer pension contributions and so will be unaffected by the change in August if their employment patterns do not change.

If you would like assistance in placing your employees on furlough leave, or if you are an employee who has been placed on furlough leave and would like to discuss your rights, please contact Ben Stanton on 01908 660966 / 01604 828282 or by emailing ben.stanton@franklins-sols.co.uk.

Disclaimer: The information provided on this blog is for general informational purposes only and is accurate as of the date of publication. It should not be construed as legal advice. Laws and regulations may change, and the content may not reflect the most current legal developments. We recommend consulting with a qualified solicitor for specific legal guidance tailored to your situation.