Employers to cover NICs and pension contributions as furlough scheme winds down

Businesses taking advantage of the Coronavirus Job Retention Scheme (CJRS) will have to pay employer national insurance and pension contributions from this month.

The change forms part of the scheme’s winding down roadmap, which will see benefits gradually disappear until the initiative is removed completely on 31 October 2020.

Starting this month, the Government will still pay up to 80 per cent of furloughed employee wages up to a cap of £2,500, but employers will be asked to begin paying Employer National Insurance Contributions (NICs) and pension contributions for the hours the employee is on furlough.

The Government will then cut contributions from 80 to 70 per cent in September and ask employers to top up furloughed workers’ wages so that they receive at least 80 per cent pay. The contribution will be cut again in October to 60 per cent, with employers asked to contribute at least 20 per cent of furloughed workers’ wages.

In a bid to persuade employers to keep workers on payroll, the Government has launched a Job Retention Bonus, offering businesses £1,000 for every employee who remains continuously employed through to the end of January 2021.

Business groups, however, have warned that small and medium-sized firms need help immediately.

“One in five small firms have been forced to let staff go over the last three months. Even with critical emergency measures in place, jobs are sadly being lost in the here and now,” said Mike Cherry, Federation of Small Businesses (FSB) National Chairman.

“Giving firms £1,000 for every employee they bring back from furlough is welcome, but Job Retention Bonus funds won’t manifest until next year – jobs are being lost today.”

He added: “That’s why we’re seeking help for employers where NICs are concerned, either through an uprating of the Employment Allowance or a NICs holiday for firms who employ those furthest from the workplace.”

For CJRS and employment support, please get in touch with our expert team today.

Posted in Business, Covid-19 - Job Retention Scheme & Furloughing, COVID-19 Updates, Start-Ups.