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Furlough scheme changes: Everything you need to know after Rishi Sunak’s announcement
CHANCELLOR Rishi Sunak revealed plans for a shake-up to the government furlough scheme at tonight’s coronavirus briefing.
We explain everything you need to know about the changes and how it could affect you.
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Two weeks ago Rishi Sunak announced the furlough scheme would be extended to October and reassured workers that they would still get up to 80 per cent of pay.
But warned businesses that they would have to foot some of the costs from August.
Employers to start paying from August
Businesses will start picking up the bill in August when they have to pay National Insurance and pension contributions for furloughed workers.
What is furlough?
THE aim of the government’s job retention scheme is to save one million workers from becoming unemployed due to the lockdown.
Under the scheme, the government will pay 80 per cent – up to £2,500 a month – of wages of an employee who can’t work because of the impact of coronavirus.
Workers will be kept on the payroll rather than being laid off.
The government will pay the associated employer national insurance contributions and minimum automatic enrolment employer pension contributions on top.
The scheme has been extended to run until the end of September (although businesses will be asked to chip in from August) and can be backdated to March 1 2020.
It’s available to all employees that started a PAYE payroll scheme on or before March 1, 2020.
If you’re between jobs, have started at a new place of work or were made redundant after this date then you can ask your former employer to rehire you to be eligible for the scheme.
Employers can choose to top up furloughed workers’ salaries by the remaining 20 per cent but they don’t have to.
Firms who want to access the scheme will need to speak to their employees before putting them on furlough.
While on furlough, staff should not undertake any work for their employer during the scheme.
This represents about 5 per cent of employment costs for businesses.
Then from September they will have to pay 10 per cent of salaries, plus NI and pension contributions.
In October, businesses will have to pay 20 per cent of salaries, plus NI and pension contributions. At the end of October the scheme will end.
Deadline for new applicants
As it stands, employers can enrol staff members on the scheme when it needs to.
It means that companies can swap employees on and off furlough so that everyone gets a chance to earn their full salary.
But from June 10, the furlough scheme will close to new applicants.
Part-time work for furloughed workers introduced
From July 1, employers can ask workers to return on a part-time basis.
This is completely up to employers but they must pay wages for the days worked.
At present, staff who are furloughed cannot work for the same company while on furlough.
If your boss wants you to work, you have to be furloughed for at least three weeks before it reemploys you. And if it furloughs you for subsequent periods, these always have to be for at least three weeks.
Can I be made redundant if I'm on furlough?
EVEN though furlough is designed to keep workers employed, unfortunately it doesn't protect you from being made redundant.
But it doesn't affect your redundancy pay rights if you are let go from your job amid the coronavirus crisis.
Your employer should still carry out a fair redundancy process.
You will be entitled to be consulted on the redundancy lay-off first and to receive a statutory redundancy payment, as long as you've been working somewhere for at least two years.
How much you're entitled to depends on your age and length of service, although this is capped at 20 years. You'll get:
- Half a week’s pay for each full year you were under 22,
- One week’s pay for each full year you were 22 or older, but under 41,
- One and half week’s pay for each full year you were 41 or older.
Sadly, you won't be entitled to a payout if you've been working for your employer for fewer than two years.
There should be a period of collective consultation as well as time for individual ones if your employer wants to make 20 or more employees redundant within 90 days or each other.
You are also entitled to appeal the decision by claiming unfair dismissal within three months of being let go.
Furlough to end in October
The scheme will end at the end of October but the government has insisted that workers and businesses will still get support.
Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.
Employees who believe they are not getting their 80 per cent share can also report any concerns to the HMRC fraud hotline. HMRC will not hesitate to take action against those found to be abusing the scheme.
More on furlough
Shake-up could see workers made redunant
Workers are likely to still get paid the same wage regardless of any shake-up to the scheme - it'll just be your employer footing more of the bill compared to the government covering all of it.
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But an adverse affect of employers having to pay more is if they simply can't afford to do so.
In this scenario, they may sadly feel they have no choice but to make workers redundant instead.
Environment Secretary George Eustice says the government has a 'series of steps' to move people off its furlough scheme and back into work
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