Retailers to start contributing to furlough bill from August

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Retailers must start contributing to furlough bill from August
Chancellor Rishi Sunak recenrlty extended the furlough scheme until October, but the government will only foot 80% of the bill until end of July.
// From Aug, employers will pay national insurance, tax & pension contributions for employees on furlough scheme
// From Sept, taxpayers will pay 70% of salaries up to £2190 & employers will be asked to contribute 10%
// From Oct, this will change to 60% to a cap of £1875 and 20% from employers

Chancellor Rishi Sunak has outlined changes to the UK Government’s coronavirus job retention scheme weeks after he confirmed it would be extended until the end of October.

Previously, Sunak said the government would cover 80 per cent of workers’ salaries up to £2500 per month until the end of July, but further details on how much of a contribution employers would need to make from August onwards were only confirmed in last night’s daily Downing Street press conference.

While the Chancellor confirmed that the scheme would remain unchanged through June and July, it would begin to taper off from August 1 when employers will be told to pay national insurance, tax and pension contributions for its employees on the furlough scheme.


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From September 1, the government would drop the coverage to 70 per cent of staff salary up to £2190 a month, with employers asked to make up the 10 per cent shortfall as well as all the tax contributions.

By October 1, Sunak said the government would cover 60 per cent of salaries to a cap of £1875 a month, with employers asked to foot the 20 per cent difference plus the tax contributions.

The Chancellor said the changes ensures workers on furlough will keep receiving 80 per cent of their wages up to £2500 a month until the end of October.

He also revealed that employees can return to work part-time without losing any furlough payments from July – a month earlier than previously planned.

Meanwhile, Sunak hinted that the furlough system could be closed from November 1.

For those in retail who are self-employed, workers can access a grant worth 70 per cent of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6570 in total.

Chancellor Rishi Sunak to outline changes to furlough scheme
Chancellor Rishi Sunak (Image: PA Wires)

The government’s coronavirus job retention scheme has so far covered the wages of 8.4 million staff unable to work during the lockdown since late March – costing £15 billion.

Retail and union leaders generally welcomed the Chancellor’s announcements.

“Retailers are working extremely hard to prepare shops for reopening and we welcome the furlough scheme extension which will continue to provide much-needed support,” BRC chief executive Helen Dickinson said.

“Businesses, however, will remain under pressure as discretionary spending is likely to remain subdued for some time, and there will be restrictions on the number of customers that can come into stores.

“The government has listened to the industry by bringing forward the ability to furlough part-time workers from July as retailers manage their workforce in the phased return to operations.

“This is in direct response to the BRC’s ask of HM Treasury. We look forward to having clarity soon on how extremely vulnerable colleagues and those that are shielding or have childcare obligations will be affected in the long term.”

Helen Dickinson BRC CEO
British Retail Consortium CEO Helen Dickinson

CBI director general Carolyn Fairbairn said: “The government’s support throughout the lockdown so far has been a lifeline for businesses, employees and the self-employed.

“The changes announced will help ensure the schemes stay effective as we begin a cautious recovery.

“Introducing part-time furloughing at the same time as more stores and factories start to open will help employees to return to work gradually and safely. Many more businesses will feel supported during this vital restart phase.

“Firms understand the scheme must close to new entrants at some point and that those using it in future will need to make a contribution to help manage the costs.

“However, previously viable firms not able to open until later, particularly in leisure, hospitality and the creative industries, may need further assistance in the coming months.”

TUC general secretary Frances O’Grady said: “We’re glad the Chancellor has listened to unions and allowed employers to start using short-time furlough from July.

“This will help employers gradually and safely bring people back to work, protect jobs and support the economy to recover.

“However, the government needs to act urgently to make sure workers with health conditions or childcare responsibilities aren’t first in line when it comes to redundancies.

“The UK cannot afford the misery of mass unemployment. The government must start planning now to build on the job retention scheme with a national recovery plan that prioritises protecting and creating jobs.

“That means a jobs guarantee scheme so that everyone can get a decent job on fair wages.”

Retailers must start contributing to furlough bill from August
The UK has been in a state of lockdown since March 24.

Len McCluskey, general secretary of Unite, said: “There is no doubt that the requirement for employers to meet pension and national insurance contributions from August, as employees have been doing all along, with further incremental changes to employer funding of the job retention scheme from September, will reveal exactly how fragile much of the economy is.

“There is also the fact that many businesses are simply not ready to bring people back to work because demand for their goods and services has evaporated.”

Institute of Directors policy director Edwin Morgan said: “The furlough scheme has played an immense role protecting jobs, and business leaders understand it couldn’t be sustained at the same level forever.

“This is a much more gradual tapering than many were expecting, reflecting the concerns our members have raised.

“Despite this, there’s no masking the fact that if demand doesn’t pick up, many firms will still struggle to keep hold of all their staff through the autumn.”

British Chambers of Commerce director general Adam Marshall said: “The Chancellor has listened to business communities and struck a careful balance that will help many firms bring furloughed staff back to work flexibly over the coming months.

“The furlough scheme has helped companies preserve millions of jobs through lockdown, but many firms still face significant uncertainty ahead.

“On that basis, closing the scheme to new applicants in June feels premature, and risks undermining some of the work already done to preserve businesses and jobs.”

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