Chancellor confirms employers will need to contribute to JRS from August

By James McAllister

- Last updated on GMT

Chancellor confirms employers will need to contribute to Coronavirus Job Retention Scheme from August

Related tags Job Retention Scheme Coronavirus

Chancellor Rishi Sunak has said that employers will have to make contributions towards the Coronavirus Job Retention Scheme (JRS) from August.

Speaking at today's (29 May) Coronavirus press briefing, the Chancellor laid out measures that will eventually lead to the scheme being closed, permanently, at the end of October. 

Sunak said the JRS would continue in its current form, which allows employers to claim 80% of an employee's wages up to £2,500, until the end of July.

In August, the JRS will continue to allow employers to claim 80% of wages, but they will be asked to pay National Insurance and employee pension contributions.

From September, employers will also be required to pay 10% of an employee's wages; rising to 20% in October.

The Chancellor also confirmed that businesses will be given the flexibility to bring furloughed employees back part time from the beginning of July, a month earlier than originally planned. 

Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them - and will be responsible for paying their wages while in work.

As a result of this, the scheme will close to new entrants on 30 June.

Additionally, the Chancellor confirmed the Self-Employment Income Scheme would also be extended, with applications opening in August for a second and final grant that will cover three months’ worth of average monthly trading profits at a reduced level of 70%, up to a total of £6,570.

Looking beyond the end of the JRS, the Chancellor said the Government would be looking to develop new measures to grow the economy; to back business; to boost skills; and to help people thrive in the new post-Covid world.

He also dismissed the notion of reopening the JRS in its current form, should the country experience a second Coronavirus wave.

"Today, a new national collective effort begins: to reopen our country and kickstart our economy," he said.

Responding to the announcement, trade body UKHospitality says it welcomes the Chancellor's 'pragmatic evolution of furlough scheme'.

“This is a positive and pragmatic step towards reopening the economy while recognising that this recovery will take time, particularly in hospitality," says UKHospitality chief executive Kate Nicholls.

"Giving businesses increased flexibility from the start of July is extremely welcome as hospitality looks to reopen its doors to the public. The move, which UKHospitality had been calling for, will allow more people back to work on a part-time basis and help venues ensure safety for customers and staff. 

"Flexibility is going to be crucial if businesses are to open and be economically viable with social distancing measures in place. The introduction of employer contributions to the scheme from August will put some businesses under particular strain, but the way it is tapered allows for a gradual adjustment.

"Further support for the self-employed is also helpful for many in our sector.

“The Government still needs to recognise that these costs will be difficult for hospitality businesses to bear, and consider other measures to support the sector. This must include brokering a solution on rents, with Treasury contributions if necessary, and considering further grants to support businesses to reopen.

“If we can find a solution on rents and get an extension of the grant scheme, this will mitigate much of the impact of the reduced furlough. If we do not, a very difficult Spring would become a disastrous Summer for hospitality.

“We hope the Government bears in mind that many high street businesses will be reopening in the next couple of weeks, whereas hospitality will be forced to survive for an additional month, at the very least, on this reduced form of furlough.”

The news, however, is unlikely to be welcomed across the industry.

A Hospitality Leaders Poll by MCA Insight/HIM from last week​ revealed that more than 40% of hospitality businesses won’t be able to contribute a penny to the JRS from August​​, unless they are operating at full capacity by then, with respondents saying the Government needed to bring in additional measures to help the hospitality sector.

While there is currently no official date set for when pubs and restaurants across the country will be able to reopen, Government guidance published earlier this month​ state that some hospitality businesses could be allowed to do so in early July.

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