Under the Coronavirus Job Retention Scheme, the UK government has been paying wage contributions of up to 80 per cent to staff who have been placed on furlough, up to a maximum of £2,500 per month.
However, from the scheme is due to come to an end on 31 October and will instead be replaced by a new Job Support Scheme.
What changes will be made in October?
From 1 October, the government will only provide 60 per cent of an employee’s salary.
Employers will then need to top up the remaining 20 per cent themselves, alongside continuing to pay employee National Insurance and employer pension contributions.
It is expacted that employers pay a minimum of 10 per cent of their staff’s wages, bringing their total monthly earnings back to at least 80 per cent of their salary.
The move follows on from changes made in July, which allowed furloughed staff to return to work on a part-time basis, while August and September saw employers required to make larger contributions.
Why was the furlough scheme introduced?
The furlough scheme was set up in March to help support employers across the UK in paying their staff wages, who would otherwise have been made redundant during the ongoing health crisis.
So far, the scheme has covered the wages of 8.4 million staff who have been unable to work during lockdown, amounting to a total cost of £15 billion.
The scheme was initially opened for a period of three months, but has since been extended until the end of October.
A separate scheme was also launched by the UK government to help support self-employed workers through the pandemic, with this amounting to a cost of almost £7 billion.
However, while the furlough scheme for permanent workers has been extended until October, the government is yet to make an announcement on how long the self-employed scheme will be in place.
How long can staff be kept on furlough?
If you have been furloughed by your employer, you will need to remain on furlough for a minimum of three consecutive weeks.
Your employer can place you on furlough more than once, and one period can follow on straight after another while the scheme is open.
The furlough scheme is currently running until 31 October.
Can staff be made redundant on furlough?
Furloughed workers are those whose employers cannot cover staff costs due to coronavirus.
As such they have been asked to stop working, but have not been made redundant.
However, your employer can still make you redundant while you are on furlough, or afterwards, but your employee rights are not affected if you have been furloughed.
This includes your redundancy rights.
What happens when the furlough scheme ends?
When the furlough scheme ends on 31 October, it will be replaced by the Job Support Schemeon – a new government-funded system of support that will start on 1 November.
Under this new scheme, the government will contribute towards the wages of employees who are working fewer hours than usual, while employers will continue to pay their staff for the hours they have worked.
For the hours employees have not worked, the cost will be split between the government and the employer, each of which will pay one third of the staff member’s equivalent salary. This means that employees who can only work on reduced hours will still receive two thirds of their salary for the time they cannot work.
Employees must be working at least a third (33 per cent) of their normal hours to be eligible and will receive a minimum of 77 per cent of their normal pay, where the Government contribution has not been capped.
The government contribution will be capped at £697.92 per month. Employers will be reimbursed in arrears for the government contribution.
After three months, the government will consider whether to increase the minimum hours threshold.