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Furlough grants – what next?

27th August 2020

So time to get you up to speed with the ever changing world of payroll. In September, furlough pay will continue to be calculated at 80% of usual pay however, you will only be able to claim 70% of usual pay back.

This means you have an effective claim rate of 87.5% of furlough pay. Let’s put some numbers to it:

  • Salary as of Feb 20 (base month for claim) £1,800;
  • Fully furloughed pay due to employee is 80% of that £1,440, and
  • Furlough claim for September will be 87.5% of that figure being £1,260.

NOTE: This is also 70% of the number you first thought of (being £1,800).

In October, this claimable amount drops to 60% of base pay – or 75% of the furlough pay:-

  • Salary as of Feb 20 (base month for claim) £1,800;
  • Fully furloughed pay due to employee is 80% of that £1,440, and
  • Claim for October will be 75% of that figure being £1,080.

NOTE: This is also 60% of the number you first thought of (being £1,800).

Maximum payments

Following the maths then – what happens to our monthly limit of £2,500? Again, if furloughing, you must continue to pay the employee at the maximum amount of £2,500 if eligible. For claiming:

  • In September the grant claim is reduced to 87.5% of £2,500 being £2,187.50, and
  • In October the grant claim is reduced to 75% of £2,500 being £1,875.

The effect of all of this is that in September the employer must contribute 10% of usual pay (subject to £2,500 cap) to the cost of furloughing the employee and in October this goes up to 20%. From November as things stand there will be no further grants available.

Filed Under: Coronavirus, Autumn 2020, News Tagged With: CJRS, furlough, furlough claim, job retention scheme, payroll

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