August furlough update – employers must start contributing

furlough payment
By Anthony Wolny | 5th August 2020 | 14 min read

As we enter August, the Job Retention Scheme (JRS) also takes on a new phase with employers now having to start contributing.

The scheme has supported over 9.3 million workers since its launch in March, covering 80% of wages up to £2,500 a month.

However, with the JRS due to end 31st October, we’re now in the process of seeing a gradual taper each month with August seeing the first alteration to contributions.

What does this mean for employers?

The grant from the Government will gradually start to reduce, and employers will have to pick up the costs.

Firstly in August, employers must start paying the employer National Insurance contributions (ER NICs) and pension contributions for all furloughed employees.

Upcoming changes in September and October 

Further changes will come into effect over the coming months, as employers will be required to start paying a small portion of the furlough wages as well as the previously mentioned ER NICs and pension contributions.

In September, the Government’s support will fall to 70% of furloughed employees wages with a cap of £2,187.50, requiring employers to top-up the additional 10%.

While in October, employers will have to add 20% as the contributions will once again drop to 60% of furloughed employees wages with a cap of £1,875.

What support is available after the Job Retention Scheme

The Chancellor revealed in his summer statement, plans for a follow-up Job Retention Bonus scheme that encourages employers to keep on previously furloughed workers.

A one-off payment of £1,000 will be available to employers for each employee brought back from furlough.

The criteria for the Job Retention Bonus are that employees must be kept on from 1st November 2020 to 31st January 2021 and earn at least £510 a month on average.

Employers will be able to claim the bonus once they have filed their PAYE for January and the payment is due in February 2021.

How can IRIS help?

We’re continuously updating all of our payroll software to ensure you can adapt your processes to all of the upcoming changes regarding furlough.

If you’re looking to try one of our payroll solutions, you can get a free trial of our powerful and user-friendly software, IRIS Payroll Business here and to view all our payroll offerings, click here.