Tonight Chancellor Rishi Sunak has outlined details of the extension to the Coronavirus Job Retention Scheme.
The scheme currently allows businesses to keep salaried staff contractually employed, but not working, while the government pays 80% of their incomes. The plan was put into place in March to keep workers at home and stave off a raft of redundancies as the economy ground to a halt.
Sunak has said furloughed staff will be able to work part-time in their old roles from July. Individual firms will decide the hours their employees will work on their return.
As indicated earlier this month, the subsidy will taper off from August
• August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed
• September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed
• October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed
NITA acknowledges that CJRS has been a lifeline for many tourism businesses, and welcomes the tapered employer contribution and option for flexible furloughing and the date change to 1st July to support the reopening of tourism business, which we have been advocating for. Tourism is a key economic driver for Northern Ireland and the industry wants to play its role in the country’s economic recovery. This measure should allow businesses to raise activity levels, alongside demand, elevating further cashflow issues and unemployment levels and we look forward to reviewing the details.
However, to do this successfully, tourism businesses need a re-open date for the whole industry and we urge the NI Executive to provide further details as soon as possible to enable tourism to take a step forward on the road to recovery. Tourism and hospitality businesses will already struggle to pay the employers contribution, with zero income, and need certainty on timelines to make key business decisions.
NITA will continue to lobby locally and nationally, alongside the rest of the tourism industry, for continued financial support after October. Although disappointed that sector specific support was not adopted, we believe on-going special consideration must be given for the tourism industry given its unique position, which unlike any other part of the economy, was hit first at the end of the quietest part of the tourism calendar with reserves and cash flow at a minimum and investments already made. It will also face a longer recovery period and far bigger challenges in restarting under continued social distancing, reliance on seasonal income and lower consumer travel confidence.
Further guidance on flexible furloughing and how employers should calculate claims will be published on 12th June.