Furlough scheme end: When does furlough pay drop to 60 percent?

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The Coronavirus Job Retention Scheme is to close at the end of October. Since its implementation in March, millions of employees have been furloughed under the scheme. Here’s how payments will decrease over the coming months.

When will the furlough scheme decrease?

The Coronavirus Job Retention Scheme was initially meant to be in place from March until June.

However, as the lockdown continued Chancellor Rishi Sunak extended the scheme until the end of October.

The extension was granted under the terms that the Government’s contributions to the scheme would start to taper off.

Prior to the start of August, the Coronavirus Job Retention Scheme paid 80 percent of an employee’s wages, capped at £,500.

However, from the start of August employers must start contributing towards the cost of employee wages.

The Government will continue to pay 80 percent of staff wages up to £2,500 from August.

But employers will be expected to cover the National Insurance and pension contributions of their furloughed employees from this point onwards until the scheme closes in October.

The Government will pay only 70 percent of employees wages, capped at £2,187.50, from September.

An employee must receive 80 percent of their usual wages, so the employer will need to top the Government’s contribution up by 10 percent, capped to a total of £2,500.

From October the Government will pay 60 percent of employees wages, capped at £1,875.

Employers will again be expected to top up wages for the subsequent 20 percent shortfall.

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Paul Holcroft, Associate Director at employment law and HR consultancy firm Croner, explained how these will look in practical terms.

He said: “Employers will need to continue paying employer National Insurance and pension contributions for not only August but September and October as well.

“Once government contributions begin to decrease, employers must also top this up to ensure that furloughed employees still receive 80 percent of their wages up to £2,500 per month.

“For example, a 70 percent grant up to £2,187.50 per month will attract a 10 percent top-up from employers to a maximum of £312.50 per month; and a 60 percent grant up to £1,875 per month will attract a 20 percent top-up to a maximum of £625 per month.”

How do I claim for the furlough scheme?

To claim via the Government website for the salaries of your furloughed employees, you’ll need the Government Gateway user ID and password you got when you registered for PAYE online.

You can save a draft if you do not finish your claim in one session, you can save a draft.

However, you must complete your claim within seven days of starting it.

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