The End is Nigh for the Furlough Scheme

By Joanna Sutton

Principal Associate

This is the last month of the Coronavirus Job Retention scheme.

From today (1 October 2020), the government’s contribution towards furloughed employees’ wages drops from 70% to 60%, up to a cap of £1,875 per month.

Employees who cannot work as a result of the pandemic are still entitled to receive up to 80% of their normal wages, (capped at £2,500), meaning that employers are required to contribute 20% towards furloughed employees’ wages, as well as national insurance and pension contributions. The furlough scheme will come to an end on 31 October 2020.

It will be replaced from 1 November 2020 by the Job Support Scheme, further details of which are in our previous article: Government Announces New Job Support Scheme

It is less generous than the furlough scheme but is intended to support viable jobs which may currently be experiencing lower demand than normal because of the pandemic.

It requires that employees work at least 33% of their normal hours, which the employer must pay them for at their normal rate of pay. The government will then pay up to 22% of their normal hours not worked, capped at £697.92, but an employer will have to do the same.

This means that employers will have to pay at least 55% of an employee’s usual wage, even if they only work 33% of their usual hours. It is not possible to claim under the Job Support Scheme if employees are not working, which is very different from the furlough scheme.

Many businesses may not be able to afford to make these higher payments to staff and are likely to be considering redundancies once again as a result.

Many businesses may not be able to afford to make these higher payments to staff and are likely to be considering redundancies once again as a result.

In fact, if there are likely to be between 20 and 99 job losses as part of an employer’s intention to restructure to coincide with the end of the furlough scheme, then collective consultation must start today, so many more employees may soon be finding themselves at risk of redundancy.

For advice or assistance in relation to redundancy, the winding down of the furlough scheme or its replacement, please contact us on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.