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FURLOUGH rules are changing again next week as the scheme enters its final month.
The government will lower its contribution again from October 1, before the scheme finishes completely at the end of the month.
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Chancellor Rishi Sunak has come under increased pressure to extend furlough amid fears hundreds of thousands of jobs could be lost when the scheme closes.
To help reduce job losses, the Chancellor has now introduced the new Jobs Support Scheme to replace furlough.
We explain what changes are coming to furlough in its final month, and how the Jobs Support Scheme works.
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How is furlough changing from October 1?
The government’s contribution towards furloughed workers’ wages will drop from 70% to 60%, up to a cap of £1,875 a month.
This doesn’t mean employees will take home less cash though.
Businesses will have to contribute 20% of salaries to make up the difference, meaning anyone on furlough will still take home 80% of their salary, capped at £2,500 a month.
Previously, furloughed workers had the full 80% of their salaries covered by the government up to a cap of £2,500 a month.
But this contribution dropped to 70% in September, up to a cap of £2,187.50, with employers paying the remaining 10% of salaries to the cap of £2,500.
The furlough scheme will then finish on October 31.
The government covered the cost of employers’ national insurance and pension contributions from March to July, but bosses had to start paying for this again from August 1.
And as of July 1, furloughed workers were allowed to work part-time for their employer while remaining signed up to the job protection scheme.
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.
What is the Jobs Support Scheme and does it replace furlough?
While furlough covered the wages of employees who couldn’t work at all, the Jobs Support Scheme is designed to help people who are working, but under reduced hours.
To receive help under the new scheme, employees must be working at least a third of their contracted hours – and be paid in full for these hours by their employer.
For the hours they’ve not worked, the government and employer will each pay one third of their salary.
It means employees can be paid 77% of their salary by working 33% of their hours.
Broken down, the government will pay 22% of these wages, while the employer will fork out 55%.
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The amount of pay the government covers will be capped at £697.92 per month.
Employees are allowed to work more than a third of their contracted hours, but the amount the government will pay is reduced – see more about how this works in the box below.
The Job Support Scheme will be available from November 1, so when furlough finishes, and will last for six months.
The Chancellor announced the Jobs Support Scheme as part of his wider Winter Economy Plan in the House of Commons.
Who is eligible for the Jobs Support Scheme?
Anyone who is in employment as of September 23 can be put on the scheme – and they don’t need to have been previously furloughed.
Small and medium-sized businesses can apply for the help, but larger firms will only be eligible when their turnover has fallen.
The government hasn’t said how workers can apply for the Jobs Support Scheme – but if it’s like the furlough scheme, it will be down to employers to register.
For furlough, employers were able to claim back the portion of wages from the government through their HMRC portal.
The Job Support Scheme will only help those on the PAYE pay roll – for self-employed workers the government has extended its self-employed income support scheme (SEISS).
Self-employed workers have also been given more time to pay their tax bill.
See all the previous furlough changes here, including everything that’s different since the start of the scheme in March.
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