Furlough scheme update: scheme to close to new applications?
It’s understandable that many employers are keeping their eyes open for a furlough scheme update from the government. Just over a week ago, official statistics revealed that 8 million jobs across the UK have been furloughed via the Coronavirus Job Retention Scheme. This means the government has been paying 80% of furloughed employees’ wages, to the tune of £11.1 billion so far.
While the scheme was originally open until the end of May, Chancellor Rishi Sunak later extended it – unchanged – until the end of June. However, while Sunak also said that the scheme would continue until at least October, it is very likely to change.
Most importantly, companies will have to contribute to furloughed employees’ wages. While no official announcement has yet been made, one report claims that employees will be asked to cover between 20% and 30% of wages, plus full National Insurance contributions.
The government will unveil the exact figures in a furlough scheme update soon. However, employers will certainly be taking a close look at which furloughed jobs are viable for the longer term.
Cut-off date for joining the furlough scheme?
If the Financial Times has got it right, there’s also going to be another major change to the furlough scheme. According to the newspaper, ‘the Treasury is eyeing a cut-off date after which no employees would be allowed to join the scheme’.
In exchange, the scheme will probably let furloughed employees return to work part-time. In other words, the Coronavirus Job Retention Scheme will shift from being a wage subsidy scheme to a back-to-work one.
If there is a cut-off date, businesses will need to think strategically about which employees to furlough. This will be particularly necessary for firms that have been taking employees in and out of furlough over three-week periods.
When can we expect a definitive CJRS update?
While changes to the furlough scheme remain at least slightly speculative, businesses need clarity as soon as possible. Multiple sources currently say that the Chancellor will provide a detailed furlough scheme update later this week. We will provide full guidance to the altered scheme shortly afterwards. However, if you use the furlough scheme, now is the time to consider whether you could afford increased contributions. You also need to think about bringing employees back to work part-time and – unfortunately – which jobs will remain viable after the changes.
As always, if you would like to talk through your options, please do get in touch with your account manager.
About Mark Boulter
Mark Boulter is responsible for the efficient running of the firm’s infrastructure, and ensuring that THP delivers the best client service. Promoting the vision and culture across all branches, people are the key: “I like people who have a fresh approach and I’m happy for them to run with their ideas,” he says.
Communication across departments is crucial and Mark pioneers this. He ensure that people and departments not only talk to each other, but that they share ideas– whether they’re about marketing, finance, sales, strategy or any other topic that can result in us offering a better service. “I think helping to develop the next generation of THP people is essential to our success,” Mark adds. “We’ve a lot of talented people and our way of doing things increasingly attracts ambitious newcomers who are looking for a fresh approach. That’s good for us and even better news for our clients.”