New furlough rules explained as they kick-in from today
FURLOUGH rules are changing from today as the government continues to wean off its support.
The changes mean employers will be forced to contribute more money toward the millions of people still on furlough.
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How is furlough changing from today?
As of September 1, the government's contribution towards furloughed workers' wages has fallen from 80% to 70%, up to a cap of £2,187.50 a month.
Previously, furloughed workers had 80% of their salaries covered by the government up to a cap of £2,500 a month.
This doesn't mean you'll take home less cash though.
Employers must now pay 10% of salaries to make up the rest of the 80% of wages, up to a cap of £2,500 a month.
What is furlough?
THE aim of the government’s job retention scheme is to save one million workers from becoming unemployed due to the coronavirus crisis.
Under the scheme, furloughed workers receive 80% of their wages, up to £2,500 a month, if they can't work because of the impact of coronavirus.
One of the main benefits of the scheme is that it allows workers to be kept on the payroll rather than being laid off.
Furlough is available to all employees that started a PAYE payroll scheme on or before March 19, 2020, although it closed to new entrants in June.
The scheme has been extended to run until October 31, 2020, and can be backdated to March 1, 2020.
Previous rules meant that staff couldn't undertake any work for their employers while on furlough.
But from July 1, staff members were allowed to go back part-time and they must be paid in full for the hours that they work.
From September 1, employers will have to start contributing 10% of wages, with the government paying the remaining 70%.
And from October 1, employers need to foot 20% of the bill, with the government making up the remaining 60%.
The government also paid the associated employer national insurance contributions and minimum automatic enrolment employer pension contributions on top, although employers started paying these costs from August 1.
With September's changes, employers' bills rise to 14% of normal staff costs, according to government estimates.
From March to the end of July, the government also covered the cost of employers' national insurance and pension contributions, but bosses had to start coughing up for this from August 1.
While furloughed workers won't actually see any change in what they're being paid, there are fears the pressure on employers may push firms into making more redundancies.
MoneySavingExpert.com founder Martin Lewis, for example, has previously warned that employers will start making hundreds of thousands of people redundant if they can't afford payments.
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.
If you're made redundant after your company has gone into administration you can claim redundancy pay .
Is furlough changing again in October?
Yes, furlough is changing again in October and it's feared this will pile even more pressure struggling firms.
From October 1, the government's contribution will fall from 70% of wages to 60% of wages up to a cap of £1,875 a month.
Businesses will then have to contribute 20% of salaries for furloughed workers to make up the difference.
That means employers will be liable for 23% of employment costs for staff who are unable to work.
The scheme ends on October 31 at which point employers will be liable for 100% of staff costs.
As of July 1, furloughed workers are allowed to work part-time for their employer while remaining signed up to the job protection scheme - the wage caps are proportional to the hours not worked.
The government hopes to combat redundancies with the launch of a new £1,000-bonus for employers who take back furloughed workers and employ them continuously through to January 31, 2021.
Announced in July's mini-Budget, firms will £1,000 for each employee that is back in work and paid at least £520 each month from November to the end of January.