Firms to pay towards revamped furlough scheme

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Firms to pay towards revamped furlough scheme

Employers will have to contribute towards the wages of their furloughed workers from September.

The Coronavirus Job Retention Scheme was first announced in March and currently allows companies to put workers on furlough leave, with taxpayers contributing 80 percent of their wages up to £2,500 a month. Major firms from across the industry including Wates, Costain, and Morgan Sindall have made use of it.

Chancellor Rishi Sunak today announced that the scheme will continue as before until August when employers will have to pay the national insurance and employer pension contributions of workers, which account for 5 percent of total employment costs for the average furlough claim.

From September, the taxpayer contribution to wages of those on furlough will drop to 70 percent, while employers are asked to pay 10 percent. In October, the last month that the furlough scheme is scheduled to run, firms will be asked to contribute 20 percent of workers’ wages, while the taxpayer funds 60 percent.

From July, the furlough scheme will also allow people to work part-time while on furlough. Those working part-time will be paid by their employer for the period they are economically active, with the taxpayer contributions covering the rest of their wages for the working week. The original furlough scheme will close to new applications on 30 June ahead of the major changes being introduced.

Announcing the changes at the daily government briefing, Sunak said: “As Britain returns to work, we need to adapt the emergency programs we put in place to bridge through the crisis. Because of those programs, our economic prospects are better than they otherwise would have been. As we reopen the economy, there is a broad consensus across the political and economic spectrum, the furlough scheme cannot continue indefinitely.

“Now, our thoughts, our resources must turn to plan for the recovery and we will need the dynamism of our whole economy as we fight our way back to prosperity. Today a new national effort begins to reopen our country and kickstart our economy.”

A Build UK survey of 22 of its members last week found that the proportion of staff on furlough had fallen to 22 percent.