The furlough scheme is winding down – here’s what that means for employers

The Coronavirus Jobs Retention Scheme (CJRS) – or furlough scheme – began winding down on July 1st. While it will continue to operate until the end of September, employers are already expected to shoulder more of the burden represented by employee salaries. This is a reflection of the reopening economy, the progress of the UK’s historic vaccination drive, and the all-round improving business landscape across the country.

According to the Institute for Fiscal Studies (IFS), 3.4 million workers were still furloughed by the end of April. At the time, that meant that the government paid 80% of their salaries (up to a maximum of £2,500) while employers just covered National Insurance and pension contributions.

However, on July 1^st, that changed and the government reduced its contribution to Just 70% of each worker’s salary. This meant that employers were now required to pay the remaining 10% themselves, along with National Insurance and pension contributions. This month, the scheme has changed again, with the government’s contribution falling to 60% and employers becoming responsible for 20% of wages, in addition to National Insurance and pension contributions. It will remain like this until the end of September, when the CJRS will finally end.

The furlough scheme has been a central pillar of the government’s business support during the coronavirus pandemic, and helped many businesses to survive. While some organisations have seen all their employees return to work, there are still thousands of companies with workers on furlough. According to the IFS, the cost of keeping these members of staff on the books despite not working will rise dramatically as a result of the CJRS winding up. The IFS has advised that a member of staff who was earning £20,000 before the pandemic struck cost employers just £155 under the CJRS. In July, that rose to £322 a month, and for this month and September, it becomes £489 a month.

If you want to ensure you are making the most of the support available to you while it is still available, then contact JW Hinks on 0121456 0190. Our friendly and professional team can ensure that you are getting everything to which you are entitled, putting your business in the best position to thrive.