Furlough changes from August 1 explained with employers starting to pay wages

FURLOUGH won't be extended beyond October the government has confirmed this week, but there are big changes to the scheme coming into force from next month.

Over 9.3million workers have been placed on the scheme, which has seen the government cover 80 per cent of wages up to £2,500 a month, since its launch in March.

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The initiative closed to new workers in June but those still on it can continue to get government funding until October 31.

But in order to get this support from August, your employer will have to start contributing too.

This has lead to fears from many experts, including MoneySavingExpert.com founder Martin Lewis, that employers will start making hundreds of thousands of people redundant if they can't afford payments.

The government hopes to combat this with the launch this week of a new £1,000-bonus for employers who take back furloughed workers and employ them continuously through to January 31, 2021.

Can I be made redundant if I'm on furlough?

EVEN though furlough is designed to keep workers employed, unfortunately it doesn't protect you from being made redundant.

But it doesn't affect your redundancy pay rights if you are let go from your job amid the coronavirus crisis.

Your employer should still carry out a fair redundancy process.

You will be entitled to be consulted on the redundancy lay-off first and to receive a statutory redundancy payment, as long as you've been working somewhere for at least two years.

How much you're entitled to depends on your age and length of service, although this is capped at 20 years. You'll get:

  • Half a week’s pay for each full year you were under 22,
  • One week’s pay for each full year you were 22 or older, but under 41,
  • One and half week’s pay for each full year you were 41 or older.

Sadly, you won't be entitled to a payout if you've been working for your employer for fewer than two years.

There should be a period of collective consultation as well as time for individual ones if your employer wants to make 20 or more employees redundant within 90 days or each other.

You are also entitled to appeal the decision by claiming unfair dismissal within three months of being let go.

If you're made redundant after your company has gone into administration you can claim redundancy pay via Gov.uk.

Each worker must be paid at least £520 per month on average, and bosses will get the cash bonus from February 2021.

The announcement comes as furlough has already been tweaked this month to allow employees to start working part-time for bosses.

Until now, you couldn't work for your employer while furloughed – and you had to be on furlough for at least three weeks at a time if you were reemployed inbetween.

But further changes are also afoot; here's what you need to know.

Changes from August

Businesses will start picking up the furlough bill in August when they have to pay national insurance (NI) and pension contributions. 

This represents about 5 per cent of employment costs for businesses. 

The government will continue to pay 80 per cent of staff wages up to the £2,500 a month cap.

Changes from September

From September, the government's contribution will fall to 70 per cent of wages up to a cap of £2,187.50 a month.

This means employers will have to pay 10 per cent of salaries to make up 80 per cent of wages in total up to a cap of £2,500.

Employers will also need to continue to pay NI and pension contributions. 

For the average claim, this represents 14 per cent of the employment costs.

Changes from October

In October, the government's contribution will fall again to 60 per cent of wages up to a cap of £1,875 a month.

This will see businesses have to pay 20 per cent of salaries to make up 80 per cent in total up to a cap of £2,500.

In addition, employers will need to continue to make NI and pension contributions. 

It means employers footing the bill for 23 per cent of employment costs.

The scheme will then end on October 31.

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