Sunak lays out JRS changes
Friday, May 29, 2020
Chancellor Rishi Sunak has laid out the details about how employers will be required to pick up part of the cost of the coronavirus Job Retention Scheme in the coming months, along with new flexibility measures.
The JRS went live on 20 April, and some 8m people are currently furloughed under the scheme.
HMRC is currently reimbursing 80% of furloughed workers’ wage costs, up to a cap of £2,500 per month.
Earlier this month Sunak announced that the scheme would be extended to 31 October, with additional flexibility around part-time working, but with employees to be asked to pay a percentage towards the salaries of their furloughed staff.
The employer contribution aspect has now been clarified, while the part-time working option has been brought forward to 1 July, from August.
From August employers will have to pay National Insurance and pension contributions.
From September the government will reduce the taxpayer-funded pay portion to 70%, up to a cap of £2,190, with employers contributing the other 10%. This employer portion will rise to 20% in October, with the government share falling to 60% (and a cap of £1,875).
If companies do not contribute, neither will the government.
As at 24 May, the scheme had been used by 1m employers and the total value of claims made was £15bn. The government said it had protected around 8.4m jobs.
Speaking at the daily government briefing this evening (29 May) Sunak said the additional flexibility of the JRS was a critical part of “kick-starting the economy”.
The old scheme will be closed to new entrants on 30 June in order to facilitate the changes. Employers wanting to place new employees on the scheme will need to do so by 10 June. Sunak said there would not be any more changes or extensions to the JRS.
1/ Our job retention scheme has now supported more than 8 million jobs and over a million businesses.— Rishi Sunak (@RishiSunak) May 29, 2020
Today I announced the final phase of this eight-month scheme. This thread outlines how we’ll introduce flexible furloughing in the coming months.👇 pic.twitter.com/6FT4kuWvle
The government said that employers would be required to submit data on the usual hours an employee would be expected to work in a claim period, and the actual hours worked.
"Employees who believe they are not getting their 80% share can also report any concerns to the HMRC fraud hotline. HMRC will not hesitate to take action against those found to be abusing the scheme."
Sunak also said that 2.3m people have applied for the separate Self-Employed Income Support Scheme (SEIS). He confirmed that it would be extended for a second and final grant, with applications opening in August. The value of the final grant will be 70%, up to a maximum of £6,570.
The TUC said that it welcomed the changes, but also warned that the UK could not afford the “misery of mass unemployment” when the JRS came to an end.
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.
“As employers begin to contribute to the costs of furlough, we remain pleased that all workers will continue to receive at least 80% of their wages for every hour worked until the scheme closes in October. 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.”
She also called for the implementation of a national recovery plan.
“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. And working with unions and business to deliver support for strategic industries that have the potential for many good jobs once the outbreak is controlled.”
“We can work our way out of recession – together.”
She also commented on the extension of the self-employed income support scheme.
“We are pleased that the chancellor has announced an extension to SEISS. Millions of self-employed workers – from the creative industries to construction – were facing a collapse in their earnings as the scheme ended.”