Furlough Changes – 31st May 2020

The government have confirmed that the UK furlough scheme will finish at the end of October 2020. They are slowly withdrawing the expensive support programme trying not to crash the economy. The government are hoping that the withdrawal process with be mirrored by business demand recovering.

Under the scheme employers’ costs are expected to be around £80bn.

The scheme currently pays employers 80% of employees wages up to £2,500 per month, which was originally due to finish the end of July.

From July, employees will be allowed to return to work part-time. This move is aimed to support people back to work. It will be up to employers to decide what part-time means, allowing them to set hours and shift patterns they return employees to work on, but employers will be required to pay 100% of wages for the time that employees are working.

Furloughed workers will continue to receive 80% of their pay, but from August the government grant will be reduced to reflect that people are starting to return to work. Employers will have to pay National Insurance and pension contributions.

For the average claim, it is 5% of the gross employment costs that the employer would have incurred if the employee had not been furloughed.

From September the government will cut its grant to 70% of wages, capped at £2,190 per month. Employers will be required to pay National Insurance and pension contributions, followed by 10% of wages to make up the 80% capped at £2,500 per month. This works out at 14% of the average gross costs the employer would have occurred.

In October, the grant will be cut to 60% of wages capped at £1,875 per month. Employers will pay National Insurance and pension contributions and 20% of wages to make up the 80%. This equates to 23% of the gross employment costs employers would have occurred.

If you would like further guidance or support on this matter please contact Clover HR on 0121 516 0299 or email us at info@cloverhr.co.uk.

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