Furlough changes take effect, affecting up to three million workers
Changes to the Coronavirus Jobs Retention Scheme take effect from today as the government reduces its contributions.
The government will now pay 60 per cent of wages up to a cap of £1,875 for the hours the employee is on furlough.
Employers need to pay national insurance and pension contributions for their workers, as well as topping up employees’ pay packets to ensure they receive 80 per cent of their wages up to a monthly cap of £2,500.
This means employers are liable for 23 per cent of employment costs for staff who are unable to work.
Employees’ income will remain the same as last month under the changes.
How does the furlough scheme work?
The Coronavirus Jobs Retention Scheme was introduced in March.
The scheme meant employers could keep staff on their payroll even if they couldn’t work because of coronavirus. The government initially paid 80 per cent of employees’ pay, up to a monthly maximum of £2,500.
The government has been gradually reducing the support on offer since the summer.
From 1 July, employers have been able to bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim the grant for the hours not worked.
The level of the grant has been reduced each month since 1 August.
In August the government paid 80 per cent of wages up to a cap of £2,500 for the hours an employee is on furlough. But employers had to pay national insurance and pension contributions for the hours an employee was on furlough
Since 1 September the government has been paying 70 per cent of wages up to a cap of £2,187.50 for the hours the employee is on furlough.
Employers have had to top up wages so that workers receive 80 per cent of their usual pay, up to a cap of £2,500 a month, for the time they are furloughed. Companies have also had to pay national insurance and pension contributions for their workers.
The changes today are the final ones before the scheme ends on 31 October.
About 3 million workers are still on partial or full furlough leave, according to latest Treasury figures.
Chancellor Rishi Sunak has announced that a new Jobs Support Scheme will start on 1 November. The scheme will run for six months with workers in “viable jobs” having their wages topped up by the government as long as they work a third of their normal hours.