The Coronavirus Jobs Retention Scheme and employers’ National Insurance and Pension contributions

Much of the coverage of the Coronavirus Jobs Retention Scheme (CJRS) has focused on the Government’s commitment to cover the cost of 80 per cent of the usual wages of ‘furloughed employees’ – those who remain on the payroll but are not working.

In fact, the CJRS will pay employers more than 80 per cent of an employee’s gross monthly salary while furloughed, because it will also meet the cost of Employers’ National Insurance Contributions (NICs) and the minimum automatic enrolment employers’ pension contributions that are attracted by the 80 per cent figure.

If you choose to top-up a ‘furloughed’ employee’s salary to 100 per cent, you will also need to meet the additional costs in terms of the NICs and pension contributions attracted by the additional 20 per cent payment. Employees will pay Income Tax and their own NICs from their gross salary as usual.

The Government has said that before the scheme goes live in April, it will issue guidance on calculating claims for Employers’ NICs and minimum automatic employment pensions contributions.