The furlough scheme will change in October - here’s what you need to know
The government’s furlough scheme will come to an end on 31 October 2020, but important changes will come into place for the last month of the job retention scheme - and both employers and employees need to be aware of them.
The scheme was funded entirely by the government when it was first put into place, but since 1 August the government has contributed less to the scheme.
Employers have therefore had to put more funds into furloughed staff’s wages in order to ensure that they continue to earn at least 80 per cent of their salary for the time during which they do not work.
From 1 October, the government will only provide 60 per cent of an employee’s salary, and employers will need to top up the remaining 20 per cent themselves, alongside continuing to pay employee National Insurance and employer pension contributions.
Since July, employers have been able to ask workers to return on a part-time basis, but they still need to pay them in full for the hours that they work.
Job Support Scheme to replace furlough scheme
The furlough scheme will end on 31 October, but will be replaced by the Job Support Scheme on 1 November, which is a new government-funded system of support. This innovation is designed to support jobs that are not entirely dependent on government funds.
Employees will work at least one third of their normal working hours under the Job Support Scheme.
The government and the employer will then each provide pay for one third of the number of hours during which they do not work, which means all employees on the scheme will receive at least 77 per cent of their normal wages. However, the government’s contribution will be capped at £697.92 per month.
All companies will be eligible to make use of this scheme, but larger businesses will need to pass specific financial tests.
Employers will then be able to claim a reimbursement for employee wages from December 2020, via an online portal.