Changes to furlough scheme from 1st July

From Thursday 1 July the government furlough grant will be reducing to 70% with the employer required to make up the remaining 10%. This continues until August where the grant reduces to 60% with businesses required to pay the difference and make up the remaining 20% of workers wages to ensure they still receive the 80%. Employers are still required to pay National Insurance and pension contributions.

To be eligible for the grant you must continue to pay your furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough. The table below shows the level of government contribution available in the coming months, the required employer contribution and the amount that the employee receives per month where the employee is furloughed 100% of the time.

Wage caps are proportional to the hours not worked.

June July August September
Government contribution: wages for hours not worked 80% up to £2,500 70% up to £2,187.50 60% up to £1,875 60% up to £1,875
Employer contribution: employer National Insurance contributions and pension contributions Yes Yes Yes Yes
Employer contribution wages for hours not worked No 10% up to £312.50 20% up to £625 20% up to £625
For hours not worked employee receives 80% up to £2,500 per month 80% up to £2,500 per month 80% up to £2,500 per month 80% up to £2,500 per month

You can continue to choose to top up your employees’ wages above the 80% total and £2,500 cap for the hours not worked at your own expense.

Sharon Smith, Chief Executive, said:

“Countless businesses have benefited from the furlough scheme, allowing them to retain their staff and not have to worry about redundancies. The tide will change however when firms are required to make further contributions. Delayed lifting in restrictions along with a tough beginning to the year, stemming from a nation lockdown, have heaped pressure on businesses cash reserves and seen their profits take a hit.

For some businesses this contribution may simply push them over the edge with some firms not having enough time to regain lost profits. For these firms who have struggled and seen the most damage to their cashflow and revenue, they may need further support from the government in order to get back on their feet before the stabilisers are completely removed and support is rescinded.

Industries such as hospitality and the events sector have particularly been hit by the restrictions and the delay in easing these measures. In order for these business to re-open and begin contributing to the recovery effort, government should be clear on how it plans on supporting businesses who need it and when it plans to allow our businesses to fully operate.”

Source: Gov UK