How today’s furlough changes affect your pay explained as scheme continues to wind down
FURLOUGH is changing again as the Covid wage support scheme continues winding down.
From August 1 the government will cover less of your furlough pay and your employer will fund more - but what does that mean for your wages?
The Coronavirus Job Retention Scheme (CJRS) as it's officially called, will end completely in September.
Today's change is part of the government's planned wind down of the scheme and follows a change last month too.
Employers have started shouldering more of the financial burden of furlough, and the government less.
The good news is that the amount you take home each month shouldn't change, unless your company is topping up your furlough money so you get extra on top.
How will furlough changes affect my pay?
The scheme first launched last year at the start of the pandemic to save millions of people from losing their jobs as businesses were forced to close and the economy almost ground to a halt.
Anyone furloughed was given 80% of their wages up to a maximum of £2,500 per month and all of this was covered by the government.
From July 1 the rules changed and the government reduced how much it covered to 70% of wages up to a maximum of £2,187.50.
Employers then had to make up the difference - 10% - so everyone on furlough still got 80% pay, up to £2,500.
From August 1, the government contribution will reduce again and the amount companies put in will rise.
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The government will only pay 60% of furloughed workers' wages up to a £1,875.
Your company will then have to pay the remaining 20% taking it up to 80% of your wages again, or £2,500.
One thing to note is that you could miss out if your company was voluntarily paying extra.
Some firms chose to top up the government payments so that employees received 100% of salary while furloughed.
They may decide to pay less than 100% because they have to cover more.
Now businesses have to foot more of the bill themselves, they may not be able to afford the extra payments.
This could put more pressure on companies and jobs and there are fears changes to the scheme could increase insolvencies and redundancies.
But generally, the extended scheme means that firms struggling due to the effects of the pandemic can continue to furlough you and recoup most of the costs from the government.
The number of people on furlough is now at a record low of 1.9million as the economy gets back on track - 3million fewer than in March this year.
More than half a million workers came off furlough between May and June alone as the country came out of lockdown.
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 .
When will furlough end?
Furlough was initially due to end on October 31, 2020 but the scheme has been extended a number of times because of the ongoing Covid crisis.
The Chancellor Rishi Sunak extended it until December 2, 2020 after England was placed in a four-week national lockdown.
Later, on November 5, he then changed his mind again and said it would run until the end of March 2021.
It was then extended again in mid-December by a month to the end of April 2021.
It was again extended - but for the last time in the March 2021 Budget, with a final end date of September 31, 2021.
There are no more changes planned to how the scheme is funded after today's changes and the ends date.
How do I claim furlough pay?
Your employer needs to claim your furlough pay through HMRC.
They will provide details of your salary so that the taxman can calculate what the business is owed.
Your pay should come through in your wage packet as normal, and you shouldn't have to do anything.
It's worth double checking to make sure your pay is right, particularly if you are on flexible furlough and working some hours as normal.
During your furloughed hours, your boss can't ask you to do any paid work.
Who can be furloughed?
Your employer can only furlough you if you were working for them and paid on or before March 2, 2021.
You can be fully furloughed, where you don't go into work at all, or flexibly furloughed where you still work some hours, days or weeks.
Any kind of employees can be put on the scheme including contractors and part-timers.
You can't choose to furlough yourself. You can ask your employer if you want to be put on furlough - for instance if you're clinically extremely vulnerable - but they don't have to say yes.
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