Changes to the Coronavirus Job Retention Scheme from 1 October mean that employers will need to fund 20% of furloughed employees’ usual wages for the hours they do not work and continue to pay their National Insurance and pension contributions.
Introduction to the Job Support Scheme
The government have announced the successor to the Coronavirus Job Retention Scheme. The scheme will open on 1 November 2020 and will run for 6 months.
The main points are as follows:
- Employees must be on the payroll on or before 23 September to be eligible. This means that an RTI submission to HMRC on or before this date must have been made
- Employees don’t have to have previously been furloughed
- The employee must work at least 33% of their usual hours.
- For every hour that an employee doesn’t work during the month, the government and the employer will each pay a third of the ‘usual wage’
- The ‘usual wage’ will be calculated in the same way as it has been for the Job Retention Scheme
Here’s a working example:
- Employee’s usual wage (as per the previous furlough calculation) is £600 per month
- Employee must work at least 33% of their usual hours
- In this scenario, the employee earns £198.00
- Hours not worked are 67%
- 67% of £600.00 is £402.00
- Employer must pay two thirds of this to the employee ie £268.00
- Employer will then receive a grant of £134.00 from the government (a third of £402.00)
More details will emerge over the coming days/weeks.