Firms must soon pay portion of furlough wages as scheme begins to wind down

Tue 26 May 2020
Posted by: Sam Pileggi
Trade News

handing over money

Businesses using the government’s furlough scheme to retain staff will be expected to start contributing from August - even if those firms remain closed during the lockdown.

Reports from the Times and the Guardian, citing sources within the Treasury, predict that firms will need to pay at least a fifth of furloughed staff wages from August. 

Firms will also have to pay furloughed employees’ national insurance contributions.

In return, companies can take furloughed workers back part-time.

The Coronavirus Job Retention Scheme (CJRS) currently pays [pls embed link] 80% of staff salaries up to £2,500, supporting 7.5 million jobs. The overall cost of CJRS to the state has been estimated at £80 billion.

Chancellor statement

Chancellor Rishi Sunak, who earlier this month announced an extension to the furlough scheme until October, is expected to make a statement on the change this week.

The Times quotes a Treasury source as saying the state had “two full months of support left … it’s fair to everyone that businesses contribute as they get back to work”.

Reassess roles

The new requirement to contribute to furlough wages will force employers to make the difficult assessment of whether those roles are still necessary as lockdown eases for businesses. 

Commentators expect a further gradual tapering off of the scheme as its scheduled end in October approaches. 

Get furlough advice

The Institute of Export & International trade last week launched a new helpdesk for business members, featuring a legal and HR telephone advice line and library of documents on furlough.

Find out more about the IOE&IT Business Shield here: