Furlough: The change this week which could affect pay and working arrangements

Furlough was first introduced by the Chancellor of the Exchequer, Rishi Sunak, as part of a number of government measures designed to help Britons during the lockdown crisis. Original rules stated the government was required to meet 80 percent of a person’s salary up to a limit of £2,500 per month. The government also agreed to meet National Insurance and pension contributions in an effort to ease the burden on employers. 

“To be eligible for the grant, employers must pay furloughed employees 80 percent of their wages, up to a cap of £2,500 per month for the time they are being furloughed.”

The changes will also usher in the level of grant employers will receive each month. 

After August, the level of grant will be reduced until the end of the scheme in October.

In September, the government is to lower its contribution in terms of wages to 70 percent, up to £2,187.50.

Employers will then be tasked with covering their workers’ wages at 10 percent, up to £312.50.

Finally, in October, the government will cover 60 percent of wages up to £1,875, with employers asked to cover 20 percent up to £625.

Fundamentally, though, employees will receive 80 percent of their wages up to £2,500. 

The changes to furlough, though, could have wider implications for employment as a whole.

Many have expressed concern about companies taking on more responsibility in terms of finances, while still potentially struggling.

The Institute of Directors (IoD) said a quarter of members using the government’s Job Retention Scheme could go bust if forced to make any contribution at all to furlough wages.

Jonathan Geldart, the director-general of the IoD stated August would usher in difficult decisions for companies. 

He said: “Business leaders know that the government’s support can’t be infinite.

“But the ugly truth is that if there’s no money coming in the door, many firms will be forced to make difficult decisions come August.

“The government must soften the blow by introducing as much flexibility as possible into the furlough system. The more flexible the scheme is, the better firms can recover, and the fewer jobs will rely on state subsidy.”

Mr Sunak has described the offering of the scheme by the government as “unprecedented”.

The Chancellor said changes to furlough would allow the government to kickstart the economy, and allow Britons to contribute to society again.

The government has resisted calls for the furlough scheme to be extended, and insisted it will end in October. 


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