Covid-19 furlough scheme wind-down 'too soon' for rural sector

03 Juin, 2020, 19:54 | Auteur: Auguste Feret
  • Infosys among firms aided by Rishi Sunak's job retention scheme

Last Friday, Chancellor Rishi Sunak led the Daily Coronavirus briefing, and revealed that the Government's Job Retention Scheme, also know as furlough would be changing in the coming weeks and months.

"For example, employers and employees can agree a return to work on a part-time basis with employees working any number of days/hours per week and shift patterns to suit the needs of the business". Employers are then responsible to pay wages in full whilst the employee is working.

Please note, an employee can work for as much or as little for the businesses as is deemed necessary.

"As before, employers can still opt to top up an employee's salary over and above the 80% if they wish".

Any remaining hours you are contracted to but aren't working will still be covered the furlough scheme, up to eight per cent of your salary which means that, at least in theory, if your employer hired you back for 20 per cent of your billable hours, you would still get the 80 per cent from the Job Retention Scheme and be able to get back to your pre-coronavirus earnings.

The scheme will close to new entrants from 30 June 2020. The government will continue to pay 80 per cent of furloughed people's wages, up to a maximum of £2,500.

In August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions - for the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed.

The final month of the scheme - unless another extension is rolled out - will see the government pay 60 per cent of wages, up to a cap of £1,875.

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The Theatres Trust, a national advisory public body for theatres, today warned that these modifications to the scheme (whereby employers have to pay a small part of furloughed employee salary as well as National Insurance contributions and pensions) "will make redundancies throughout the sector inevitable" and may "close theatre businesses", with 70 per cent of United Kingdom venues already stating that they'll run out of money by the end of 2020. This should help employers gradually get people back to work, protecting jobs and helping the economy to recover.

Pensions and Lifetime Savings Association (PLSA) director of policy and research, Nigel Peaple, added: "Since the introduction of the Coronavirus Job Retention Scheme, the Treasury has given vital support to furloughed workers' pension contributions that have no doubt eased financial hardship and anxiety for the millions affected".

When claiming the CJRS grant for furloughed hours, you will need to report and claim for a minimum period of a week.

With large swathes of the United Kingdom economy still unable to return to work or working at a far lower capacity, the chancellor confirmed in mid-May that the Coronavirus Job Retention Scheme would be extended until the end of October.

The government will continue to pay the same amount as previously, with no contributions being required by business.

According to Sunak, the initiative has helped one million employers across the United Kingdom furlough 8.4 million jobs, protecting people's livelihoods and hopefully enabling companies to be able to bounce back as lockdown measures are relaxed over the coming months.

"It would have been all too easy for the Chancellor to have forgotten about workplace pension contributions for furloughed employees, but that would have had long term negative impacts for the retirement prospects of many millions". However, they will now have to pay 20% of employee wages.


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