The Government’s recent extension of the lockdown until 19th July is particularly ‘punitive’ for those employers who have been using the Government’s furlough scheme to support their employees during lockdown, say tax and advisory firm, Blick Rothenberg. Robert Salter, Tax Director, spoke to Business Leader on the issue.
Under the furlough scheme, employers are required to pay ten percent of the employees’ wages (assuming the employee is on the 80% furlough pay rate) Employer NICs and Employer pension contributions.
Despite the recent extension to the lockdown, the Government has not announced any additional or new support in this area. This means that employers – already under severe financial pressure in many cases because of the ongoing Covid restrictions impacting their businesses – now need to find these additional costs for at least another four weeks, at a time when their income (if any) remains severely restricted.
However those employers who haven’t been paying their staff during the lockdown – e.g., because employees were typically on zero hours contracts and the employer decided not to support these workers via the furlough scheme – avoid these costs which seems hardly fair.
Whilst it is inevitable that there will be winners and losers with the Government’s Covid support measures, the Government needs to review this situation closely and consider whether more targeted support, should be provided to those employers with staff on furlough.
If the Government is serious about ‘levelling up’ and ensuring that the economy ‘bounces back better’, it is vital that support is provided to the best employers.