Changes to furlough scheme July – September
This month the state’s contribution to a furloughed workers wages drops to 70% to a cap of £2,187.50 for the month, with employers picking up 10% (up to £312.50) plus the NI and minimum pension contributions.
In August and September the government contribution will be 60% to a cap of £1,875 for each month, with employers picking up 20% (or up to £625.) 30th September will be the final day of the scheme, and let’s hope we never have to see another one.
These changes won’t impact furloughed workers who will continue to receive 80% of wages to a cap of £2,500 per month. Employers are not permitted to reduce that amount to reflect their own rising costs. For this reason we are expecting a wave of redundancies over the next 3 months.
With the economy struggling to find labour, why are so many still furloughed?
Many commentators, myHRdept included, are perplexed at why the furlough scheme is continuing to run for another 3 months when the country is due to re-open without restrictions on 19th July, and when many sectors are struggling to attract workers (see our earlier article ‘critical-staff-shortages-as-millions-languish-on-furlough’). It’s widely believed that a lot of furloughed workers are already out of a job, but just don’t know it yet. If that’s true it follows that many of these could be redeployed into available vacancies with other employers, rather than being paid to stay at home doing nothing.
The latest iteration of the furlough scheme was put in place at the turn of the year, before the success of the vaccine programme was known, along with the apparent break of the link between covid and deaths. The government was admirably slick in introducing the scheme at a time of great national need, but its nimbleness then has been replaced with the sort of sluggishness we would ordinarily expect from the public machine. It’s surprising how little press coverage has been given to the possibility of winding up the furlough scheme early, particularly in the light of unfilled vacancies and well documented stories of businesses unable to properly open through a lack of staff.
A reminder for those employers contemplating making redundancies – a redundancy dismissal is potentially fair provided a proper consultation process is followed, and this must be a minimum of 30 days if proposing 20 or more redundancies, or 45 days for 100 or more. myHRdept customers should talk to us about potential redundancies in good time before they wish their consultations to begin.