COVID-19: Government to cover employer NICs and pension contributions of furloughed workers

Posted on: 03/04/2020

The Government has announced that it will cover employer National Insurance Contributions (NICs) and pension contributions of furloughed workers.

The new measure forms part of the emergency financial package for employers and workers affected by the COVID-19 pandemic.

The Coronavirus Job Retention Scheme empowers businesses to retain employees by covering up to 80 per cent of wages of furloughed workers, up to a maximum of £2,500 per worker per month. Employers can optionally make up the remaining 20 per cent.

However, the Government says applicants will now receive “further financial support” – by covering the costs of employer NICs and minimum pension contributions.

According to the Treasury, the new measure could save businesses up to £300 per month per employee.

The new guidance states: “The government will now cover the employer national insurance and minimum auto-enrolment pension scheme contributions employers pay on the wages they must pay their furloughed staff – on top of the wages covered under the scheme.”

In a similar announcement, the Government has also confirmed that furloughed workers will be allowed to volunteer for the NHS “without risking their pay” – a furloughed employee cannot undertake work for the employer or any other organisation.

Commenting on the measures, Chancellor of the Exchequer Rishi Sunak said: “Since the start of the coronavirus outbreak, I’ve made it clear that hard-working employers and employees should not have to suffer hardship unnecessarily.

“Our Coronavirus Job Retention Scheme supports workers and businesses up and down the UK – and today we’re strengthening it because we will do whatever it takes to support jobs.”

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