As Covid-19 restrictions continue to be eased amid growing case numbers and fears over the Delta variant’s rapid rise across the UK, a number of UK Government support schemes are preparing to be wound down – with furlough included among them.
Furlough became a staple of the pandemic’s devastating economic impact on businesses in the UK and worldwide, as many found themselves unable to afford to keep staff on full-time when lockdown commenced.
As of June this year, 2.4 million people remain furloughed or flexi-furloughed across the UK – a far cry from the height of the pandemic last year when the figure was closer to 10 million people.
While recent signs of economic recovery have helped buoy businesses as restrictions ease, any potential re-imposition on trading or travel restrictions could leave employers struggling as furlough is phased out.
For now though, here’s what furlough is and when it will end in the UK.
What does furlough mean?
The UK Government created the furlough scheme last year as part of its coronavirus support package to help bring stability to the country amid its economic crisis.
To mitigate the economic downturn deepened by businesses unable to trade and forced to make job cuts or redundancies, furlough was created as a way to keep staff in their jobs by taking time off or working less hours.
Unlike working from home, the majority of furloughed workers would not receive any work but had 80% of their monthly wage or salary at £2,500 or less paid by their employer in order to keep them on – with the company then claiming this back from the government.
This will remain the same under new rules, with furloughed workers on a salary of £2,187.50 or less still seeing 80% of their wages.
But there will be some changes for employers as the UK Government prepares to phase out the Coronavirus Job Retention Scheme.
Who can make a furlough claim?
The furlough scheme is open to small and large employers who can claim furlough on their workers’ behalf – individual staff members cannot make a claim themselves.
An employer is able to choose the hours and work patterns of an employee’s furlough, but cannot ask an employee to perform any work which would make money or provide services for the company or affiliated organisation within furloughed work periods.
When will furlough end?
Furlough began to be phased out on July 1 as new rules dictated that employers needed to contribute 10% of furloughed workers wages as the government reduced the amount it it would subsidise to 70%.
The start of August saw the amount of government support for the furlough scheme staggered down by another 10%, with the government only contributing 60% of monthly wages up to £1,875 and employers having to contribute 20% of furloughed employee’s wages.
The decrease in furlough support from the government and additional pressure on employers to pay up is prompting fears for many as the Universal Credit uplift of £20 is also set to end in Autumn.