Winding down of Furlough scheme

From 1st July 2021, employers must now pay part of employees’ furlough wages as the Coronavirus Job Retention Scheme (CJRS) starts to wind down. What do you need to know? Head of Payroll Joanne Gibson advises.

For claim periods ending on or before 30 June 2021 you could claim (from the CJRS) 80% of an employee’s usual wages for hours not worked, up to a maximum of £2,500 per month, and you only needed to cover the employers’ NI and auto-enrolment pension contributions. However, for claim periods from 1 July 2021, the level of government grant under the CJRS is being gradually reduced and you must now contribute towards the cost of your furloughed employees’ wages as follows:

July – government contribution to wages for hours not worked:
70% up to a cap of £2.187.50; employer contribution to wages for hours not worked: 10% up to a cap of £312.50.

August – government contribution to wages for hours not worked:
60% up to a cap of £1,875; employer contribution to wages for hours not worked: 20% up to a cap of £625.

September – government contribution to wages for hours not worked:
60% up to a cap of £1,875; employer contribution to wages for hours not worked: 20% up to a cap of £625.

You must also still pay the employers’ NI and auto-enrolment pension contributions.

Your furloughed employee will therefore continue to receive 80% of their usual wages, up to the cap of £2,500 per month, for the time they spend on furlough, but their wage payment is now partly funded by you.

The CJRS is then due to come to an end on 30 September 2021.