Employers Now Liable For 10% Of Furlough Wages

From 1 September, the government will pay 70% of wages up to a maximum cap of £2,187.50 for the hours the employee is on furlough. Employers will top up employees’ wages by an additional 10% to ensure they receive 80% (up to £2,500). The caps are proportional to the hours not worked.

From August, employers began paying National Insurance and pension contributions, with a 10% contribution of pay from September, rising to 20% in October.

Some 8.4 million workers were having 80% of their salaries paid for by the government – up to £2,500 a month – under the scheme, which was originally intended to last until the end of July.

The chancellor subsequently extended the scheme until the end of October, with the government then paying 60% of wages up to a maximum of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.

The take-up has been significant, with 9.6 million workers furloughed by 1.2 million employers since March.

These employers had made £34.7bn of furlough claims by 9 August, and the scheme will cost the government an estimated £80bn in total.

The scheme covers full-time, part-time, flexible, zero-hour and agency workers if they were on their employer’s PAYE payroll on 19 March 2020.

Workers must be furloughed for at least three weeks, and can be furloughed more than once.