Small businesses could have to cover up to one third of furlough cost #SmallBiz - The Entrepreneurial Way with A.I.


Saturday, May 23, 2020

Small businesses could have to cover up to one third of furlough cost #SmallBiz

Originally written by Timothy Adler on Small Business

Rishi Sunak is set to announce this week that small businesses will have to cover anything between 20-30 per cent of the cost of furlough.

Meaning that small businesses will have to fork out £833 per month to keep each staff member on furlough if they’re claiming the full £2,500 amount.

And small business owners will also have to pick up the cost of national insurance contributions on top, on average 5 per cent of wages, says the Times.

According to accountancy firm Wellers, this would cost an additional £245.73 per month, bringing the monthly total for each furloughed employee to over £1,000 a month.

However, the government will still cover the cost of pension contributions. Previously, Bloomberg reported that the Treasury was considering asking businesses to cover both national insurance and pensions.

>See also: Rishi Sunak extends job retention furlough scheme to October

What’s being floated today goes much further.

Unemployment scrapheap

The fear is that many small businesses, especially those in leisure and hospitality, will be forced to throw staff onto the unemployment scrapheap, as the Treasury effectively ends the Coronavirus Job Retention Scheme (CJRS) in August, not October.

The hospitality sector, which will be the very last sector to reopen, estimates that 2m jobs will be lost as workers come off the furlough scheme.

However, as Small Business revealed, furloughed workers will be allowed to be taken back on part-time immediately. Shops have been allowed to reopen from June 1 but with a cratered economy and uncertain demand, shopkeepers do not know whether they can justify bringing somebody back full time.

More than eight million people have been furloughed, equivalent to one third of the private sector workforce. The Office for Budget Responsibility has said the job retention scheme could end up costing the taxpayer up to £80bn.

Further reading

Government launches business Coronavirus Job Retention Scheme

Small businesses could have to cover up to one third of furlough cost

via by Timothy Adler, Khareem Sudlow