The furlough scheme underwent a major change at the start of September, as Rishi Sunak aims to finish the scheme at the end of October.
Find out all of the changes you need to know in our blog below.
The coronavirus job retention scheme, or Furlough, as it is more commonly known, was introduced back in March.
The aim of the scheme was to relieve the financial pressure that wages put on businesses during the coronavirus pandemic, whilst also ensuring that workers were still paid.
The government committed to paying 80% of a worker’s wage (up to £2,500) if they were placed onto the scheme.
This payment also covered National Insurance and Pension contributions – with over 9million people being placed onto the scheme.
The scheme was extended until the end of October, although Rishi Sunak promised that changes would have to happen as the scheme was slowly wound down.
So far, the changes intend to put more financial responsibility back onto businesses, and less on the government.
From September 1st even more steps will be taken to make this transition a reality.
From September the government will now pay 70% of workers wages (up to £ 2187.50) for the hours that the worker is on furlough.
Employers will be required to pay both NI and Pension contributions, but they will also need to ‘top up’ the workers wages to 80%.
Businesses have always been given the option to ‘top up’ a furloughed workers wages above the government’s 80%, however this marks the first time that businesses will be required to ‘top up’ wages to the 80% standard.
Significant Decisions Moving Forward
Businesses still using the furlough scheme have some significant decisions to make.
In August they were only required to pay the NI and Pension contributions for a furloughed worker…. Now they will have to pay 10% of wages.
And this figure is set to increase again in October, where businesses will be expected to pay 20% of a furloughed workers wages, while to government pays 60%.
So how do you plan for life after furlough?
There are concerns about the level of redundancies once the furlough scheme closes. However the government are starting to implement new legislation to protect some of these roles.
For example: if someone is made redundant while on furlough, they will be entitled to redundancy pay based on their normal wages, rather than their furloughed ones.
The business secretary Alok Sharma said:
“New laws coming into force will ensure furloughed workers are not short-changed if they are ever made redundant – providing some reassurance for workers and their families during this challenging time.”
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