Furlough extended but employers contributions rise

The chancellor confirmed a further extension of the government’s Coronavirus Job Retention Scheme (CJRS) in his Budget statement.

The CJRS scheme, which was set to have closed at the end of next month, will now continue until the end of September.

Rishi Sunak said the extension of the scheme – which pays 80 per cent of employees’ wages for the hours they cannot work in the pandemic – would help millions through “the challenging months ahead”.

The initiative has been credited for protecting 11 million jobs at risk from the impact of the Covid-19 pandemic since it was launched last March.

However, despite the extension, the government’s contribution to the scheme will start to be reduced, with employers expected to pay 10 per cent towards the hours staff do not work in July.

Employee contributions will rise to 20 per cent in August and September as the scheme is wound down and the UK economy and businesses begin to reopen.

There will be no changes to the payments employees can received under the CJRS scheme during this extended period – it remains at 80 per cent of their wages for hours not worked as a result of being furloughed, up to a maximum of £2,500 a month.

Mr Sunak also confirmed that the government’s contribution to the furlough wage would remain unchanged until the end of June.

That means for the three-month period from May 1 to June 30, the government will fully fund the payments to employees, with employers only bearing the cost of employer’s NICs and pension contributions.

The eligibility requirements for claims up to April 30 are also unchanged. However, after May 1 this year employers can claim for workers who were employed on March 2, 2021, as long as they have made a PAYE Real Time Information (RTI) submission to HMRC between March 20, 2020 and March 2, 2021.

It is also not necessary for employers to have previously claimed for a member of staff before March 2, 2021.