Employers
are set to pay 20% of workers’ salaries by October as the chancellor revealed
changes to the furlough scheme in the final months
Amid the coronavirus pandemic, the government has enforced a furlough scheme to ensure workers will still get 80% of their pay meanwhile UK’s self-employed have also been covered with grants to support the country’s workforce during this difficult time. Chancellor Rishi Sunak has announced a series of new changes to the government furlough scheme along with extensions to the existing self-employed scheme.
The government’s job retention scheme aimed to save one million workers from becoming unemployed during the coronavirus lockdown. On Friday’s Downing Street press conference, Sunak revealed new changes to UK’s furlough scheme, where the government currently pays 80% of employees’ earnings of up to £2500 a month. The scheme will officially come to a close in October, Sunak announced. However, businesses will have to pay towards the furlough scheme including national insurance and pension contribution in the following months.
In new changes to the scheme, employers will not be required to pay contributions for June and July. However, in August, employers will be asked to pay National Insurance and pension contributions but the government the tax contribution will stay at 80 per cent. By September, the final two months of the scheme, 70 per cent of the grant will be paid by the taxpayer and 10 per cent will be paid for by employers, plus NI and pension contributions. In October, taxpayers will pay 60 per cent with and businesses will have to pay 20 per cent of salaries, plus NI and pension contributions. From July 1, the government will implement a new flexible furlough where employers can ask workers to return on a part-time basis – but employers must pay wages for the days worked. Also, the self-employment income scheme will be extended and workers will be eligible to apply for second and final coronavirus grants in August, covering 70% of the applicant’s average monthly profits for three months.
Workers will still likely get paid the same wage regardless of the new changes, as employers will just be responsible for footing more of the bill. However, this may put an additional strain on employers and some may choose to make workers redundant to forgo the costs. Even though furlough is designed to keep workers employed, it doesn’t protect them from being made redundant. However, employees should still carry out a fair redundancy process.
Mr Sunak said: “Our top priority has always been to support people, protect jobs and businesses through this crisis. The furlough and self-employment schemes have been a lifeline for millions of people and businesses.
“We stood behind Britain’s businesses and workers as we came into this crisis, and we stand behind them as we come through the other side.
“Now, as we begin to re-open our country and kick-start our economy, these schemes will adjust to ensure those who can work can do so while remaining amongst the most generous in the world.”
