Furlough Changes

By Gary Smith


Today, 1 July, is the first day of the wind down in government furlough support. 

Although employees will continue to receive 80% of their wages whilst furloughed, the government support will start to wind down and only reimburse 70% of the employee’s wages, with the employer having to pay the remaining 10%. This government support will then reduce further from 1 August, to 60% with the employer then having to pay the balancing 20% of a furloughed employee’s wages. The scheme will then continue at that level before ending entirely on 30 September.

There had been hope that with the extension of lockdown the furlough support would be extended as many businesses remain restricted in their trading due to lockdown rules and some, such as nightclubs, remain entirely closed until at least 19 July. The government’s decision not to extend the scheme will place additional financial strain on those businesses with furloughed staff. The IFS has said that the cost for retaining a member of staff on furlough would increase from £155 per month currently, to £322 in July and £489 in August. These can be significant sums when multiplied out across the workforce.

Realistically as furlough ends the number of redundancies and people losing their jobs is going to rise as the economy adjusts to the post-lockdown world. 

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