Back on the 12th May, Rishi Sunak announced that changes were to be made to the Coronavirus Job Retention Scheme, or Furlough Scheme. There are currently 8 million people receiving 80% of their salary from the Government, a quarter of the total jobs in the UK.
Those changes included the following:
- The Scheme has been extended to October.
- Employees will continue to receive 80% of their salary, up to £2,500.
- Employers will have to pay ‘a share’ of that amount from August, with the Government making up the rest. (Please note: This was originally reported as 50% of the 80% being paid by each of the employer and the Government, but the most recent publication on the Gov.uk site does not show a figure.)
- All sectors and regions of the country will continue to be eligible for the scheme.
- There will be greater flexibility to come, to support the transition back to work.
- Employers using the scheme will be able to bring employees back to work on a part-time basis from August.
So far, we’ve been waiting for the details behind these changes, and as they were promised for the end of May, time is running out!
What might happen?
The most concerning issue is the percentage that employers will have to ‘share’ the cost of the Government support. There is no definite news on this one as yet, but there have been reports that the draft figure will be 20%. there have also been reports that a sliding scale will be announced, with the employer’s contribution increasing over the coming months.
For businesses who’ve had no income since early March, this could well be the difference between them making redundancies or not.
‘Flexible Furloughing’ was mentioned by Rishi on social media this week, after he had a video conference call with users of the scheme. This could be a good thing for businesses.
Calls to be able to bring furloughed employees back part-time before the original 1st August have been strong, and it’s thought that an earlier start date will be possible.
There are however, worries that there will be trade-off made for this concession.
Rumours abound that the scheme will close to new entrants before the part-time facility will kick in, meaning that if you haven’t already furloughed staff, you won’t be able to do so. The assumption also has to be that the ability to rotate furloughed staff may also cease from this point.
Business leaders are calling for a buffer of time between the announcement and implementation of any such change, to allow small businesses to review their plans. With the current three week minimum furlough period, some employers may well want to choose to bring back alternative employees to carry them through if there is no chance of rotation later.
The risk from a delayed change is that employers may choose to furlough more of their team, to effectively reduce their hours from full to part-time, and claim through the scheme. The Treasury has said that they don’t see this as a significant risk, and in fact it could be a way for businesses to maximise their opportunities for the next few months.
Whatever the announcement, we’ll bring you the details as soon as we have them. If you have any questions on the above, please do get in touch.