10% furlough contributions start this week

By Nikkie Thatcher contact

- Last updated on GMT

Contribution change: from July, employers will have to pay 10% of employees' wages (image: Getty/stuartmiles99)
Contribution change: from July, employers will have to pay 10% of employees' wages (image: Getty/stuartmiles99)

Related tags: Legislation, Government, Staff, Finance

From tomorrow (Thursday 1 July), operators with staff on furlough will have to contribute 10% before it rises to 20% in August.

This is in addition to the national insurance and pension contributions employers are already paying for furloughed workers.

The Chancellor originally announced the Coronavirus Job Retention Scheme (known as furlough) as the pandemic hit the UK in March 2020.

This first phase was due expire in May 2020 but was extended until June and then was continued until October and the 'flexible furlough' was also introduced in July, allowing employees to work part-time and be furloughed part-time.

Previous extensions

The scheme was then extended into a third phase from November 2020 until March 2021, and this was followed a further extension to 30 April 2021 before Chancellor Rishi Sunak announced it would continue again until the end of September 2021.

In the spring Budget earlier this year (Wednesday 3 March), Sunak said: “The furlough is being extended to the end of September [with] no change for employees.

“As businesses reopen [we will] ask them to contribute alongside the taxpayer. Nothing will change until July, when we will ask for 10% and 20% in August and September.”

At the time, UKHospitality boss Kate Nicholls voiced her concerns about how businesses are expected to contribute to the scheme from July.

Unnecessary pressure

She said: “It will place unnecessary pressure on fragile businesses just as they are beginning to get back to their feet.

“It is also very disappointing not to have national insurance contributions removed from the scheme. Businesses are burning through their cash reserves and many will have exhausted them before they have a chance to reopen.

“Not all businesses are going to be out of the traps instantly. It will take time for them to reopen and they will be racking up costs in the meantime.”

For July, the taxpayer-backed scheme will pay 70% of an employees’ wages, up to £2,875, with employers covering 10% and for August and September, the scheme will cover 60% up to £1,875, with employers being asked to put in 20% each month.

Related topics: Legislation

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