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Restaurants Will Have to Start Paying Towards Furloughed Staff Wages This August

Chancellor Rishi Sunak also announced that “flexible furlough” will be introduced from 1 July

UK Eases Some Restrictions In Eighth Week Of Coronavirus Lockdown Chris J Ratcliffe/Getty Images

Chancellor Rishi Sunak has announced that the government will implement changes to the Coronavirus Job Retention Scheme (CJRS) beginning in August. Speaking at the government’s official daily press briefing, Sunak said that businesses such as restaurants will have to contribute to the wages of furloughed employees in incremental percentages each month from August until the scheme expires at the end of October.

Sunak said no changes will be made to the scheme — which covers 80 percent of worker’s wages up to the value of £2,500 a month — in the months of June and July. From August, employers will be asked to pay staff’s national insurance and pension contributions. An amount, Sunak said, averages five percent of a worker’s wage.

In September, the government will reduce its contribution from 80 to 70 percent, asking employers to pay 10 percent of the staff’s wage. Then, for the final month of the scheme, the government’s contribution will be reduced by a further 10 percent, resulting in a 60-20 percent split for the taxpayer and employer, respectively.

The measures are designed to dove-tail with the proposed reopening date set for restaurants in the U.K. The government has given notice to the industry that the first week of July would be the earliest they can reopen, however it does stress that some “crowded venues” may then not be able to reopen, and any reopening is conditioned on policy makers being satisfied that businesses can do so safely — they have repeatedly stressed that they will be guided by scientific advice.

Though many restaurants will be sanguine that the furlough scheme could not last forever, its expiration date and tapering off will give them a fresh sense of the reality they are set to face for the rest of the year. If restaurants can reopen, as they have begun to across the city in the last two weeks, they are doing so with skeleton staff. Long-term social distancing measures as well as consumer nervousness will necessarily mean that restaurants will operate with fewer employees than they did before lockdown, at least in the short- and medium-term.

To mitigate that to some extent, Sunak also said the government will introduce “flexible furlough” from 1 July — a measure designed to give businesses the ability to bring back some staff part-time in the months up to October, while keeping them on furlough for the days they do not work.

Finally, Sunak said that all applications for the CJRS would close on the 10 June.

More soon.