THE furlough scheme will soon come to an end as lockdown restrictions ease across the UK and more Brits returning to work.
The government’s coronavirus job retention scheme has allowed millions unable to work due to coronavirus to claim 80 per cent of their normal wage up to £2,500 a month.
Chancellor Rishi Sunak said after months of support, the government now needs to start weaning “addicted” workers off the state-subsidised wage support.
Employment experts have warned that withdrawing the support could put thousands of jobs at risk.
If you’re worried about your job, Times Money Mentor has a guide to your rights if you’re made redundant while on furlough.
But when will it come to an end? Here’s everything you need to know about the future of the furlough scheme and how it affects you:
When will the furlough scheme end?
The furlough scheme has been pushed back to end on October 31.
Chancellor Rishi Sunak first announced the scheme on March 20, saying it would end on May 31.
The government then announced on April 17 that it would be extended by a month until the end of June, 2020.
And again, on May 29, Mr Sunak revealed that the furlough scheme would be pushed back to end on October 31.
Taxpayer subsidiaries will drop and employer contributions will increase gradually until then.
What is the government furlough scheme?
Simply put, if your employer has been forced to close temporarily due to coronavirus, it can claim 80 per cent of your wages, which it will then pay to employees.
Claims are, however, capped at £2,500 a month for each employee, so if you usually earn a lot more than that you’ll see a bigger drop in wages.
Your company can top up the remaining money you’d usually be paid, but most businesses are taking a serious hit and have chosen not to.
Bosses can also claim employer national insurance contributions and minimum automatic enrolment pension contributions on top for wages up to £2,500 a month, although this is due to end in August.
How many people have been furloughed?
More than 9million workers have been furloughed, although new applicants were prevented from joining the scheme from June 10.
Two-thirds of British businesses have used the government’s scheme since it was announced and one in three companies have put at least 75 per cent of their workforce on furlough, according to a survey published by the British Chamber of Commerce
But there are concerns many struggling companies will lay off staff without the security of government-backed cash.
Under current employment laws, companies have to give 45 days notice before cutting roles.
On July 8, Chancellor Rishi Sunak said in a statement to MPs: “Furlough has been a lifeline for millions supporting people and businesses to protect jobs. But it cannot and should not go on forever.
“It gives people false hope that they would be able to return to the jobs they had before.”
How much has the scheme cost the government?
The Office for National Statistics (ONS) estimates furlough is costing around £8billion a month.
Data released by the Treasury show that by midnight on June 28, £25.5 billion in wage subsidies had been paid to employers.
Additionally the support scheme for the self-employed rose to 7.7bn.
How is the furlough scheme changing?
The government announced a shake-up to the furlough scheme in June that will see a number of changes come into force from July 1 onwards.
From July 1, bosses can bring furloughed employees back to work for any amount of time and shift pattern, and still claim furlough payments for the time they are not working.
Changes from August
Businesses will start picking up the furlough bill in August when they have to pay national insurance (NI) and pension contributions.
This represents about 5 per cent of employment costs for businesses.
The government will continue to pay 80 per cent of staff wages up to the £2,500 a month cap.
Changes from September
From September, the government’s contribution will fall to 70 per cent of wages up to a cap of £2,187.50 a month.
This means employers will have to pay 10 per cent of salaries to make up 80 per cent of wages in total up to a cap of £2,500.