Reduced rate for furlough scheme starts 1 September

HMRC has reminded businesses that the Coronavirus Job Retention Scheme changes in September, with employees only getting 70% of wages while furloughed.

From 1 September the CJRS will reduce to only pay 70% of the usual wages (up to a cap of £2,187.50 per month) for the hours a furloughed employee does not work. Employees will still be entitled to be paid at least 80% of their usual wages for the hours they do not work, up to the cap of £2,500 per month

Employers will therefore be required to fund the difference between this and the reduced CJRS grant received. Employers cannot pay any employee that they are claiming for through CJRS, less than 80% of their usual wages for the hours they do not work, up to the cap.

The wage caps are proportional to the hours that are not worked. The CPT provides an example, where an employee is furloughed for half of their usual hours in September, they are entitled to be paid 80% of their usual wages up to £1,250 (50% of the £2,500 cap), wheras the employer can reclaim 70% of their usual wages for the hours they do not work up to £1,093.75 (50% of the £2,187.50 cap).

Employers will also have to continue paying the Employers National Insurance (ENIC) and statutory pension contributions based on the full amount of furlough pay the employee receives.