These new rules to the furlough scheme are expected to be announced today - including employer contributions
Chancellor Rishi Sunak is expected to make an announcement about the government’s furlough scheme today (29 May), with reports suggesting employers will be asked to pay a contribution.
Under the Coronavirus Job Retention Scheme, the government pays 80 per cent of the wages of staff who have been placed on furlough, up to a maximum of £2,500 per month.
However, employers are now expected to have to contribute 20 per cent of their workers’ wages, as well as national insurance and pension contributions.
When will the changes be made?
It is understood that the government will reduce its payments to employees’ wages to 60 per cent, up to a cap of £2,500 per month from August.
From this point, Mr Sunak is set to tell employers they will need to pay 20 per cent towards their furloughed workers’ salaries.
He is also expected to close the furlough scheme to new entrants and prevent employers from rotating staff, according to reports.
The change comes as the government admitted the scheme cannot run “indefinitely”.
The Chancellor is to make an announcement about the scheme during the daily Downing Street press conference on Friday, outlining changes to the scheme.
Treasury sources did not deny reports that Mr Sunak will ask employers to contribute around 20 per cent of wages, along with National Insurance and pension contributions, from August.
Why was the furlough scheme introduced?
The furlough scheme was set up in March to help support employers across the UK in paying their staff wages, who would otherwise have been made redundant during the ongoing health crisis.
So far, the scheme has covered the wages of 8.4 million staff who have been unable to work during lockdown, amounting to a total cost of £15 billion.
The scheme was initially opened for a period of three months, but has since been extended until the end of October.
A separate scheme was also launched by the UK government to help support self-employed workers through the pandemic, with this amounting to a cost of almost £7 billion.
However, while the furlough scheme for permanent workers has been extended until October, the government is yet to make an announcement on how long the self-employed scheme will be in place.
How long can I be kept on furlough?
If you have been furloughed by your employer, you will need to remain on furlough for a minimum of three consecutive weeks.
Your employer can place you on furlough more than once, and one period can follow on straight after another while the scheme is open.
The furlough scheme is currently running until the end of October.
Can I be made redundant on furlough?
Furloughed workers are those whose employers cannot cover staff costs due to coronavirus.
As such they have been asked to stop working, but have not been made redundant.
However, your employer can still make you redundant while you are on furlough, or afterwards, but your employee rights are not affected if you have been furloughed.
This includes your redundancy rights.