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Farewell to Furlough


The 1st September 2020 marked the beginning of the end of the government’s Coronavirus Job Retention Scheme (‘furlough scheme’). Back in March 2020 the furlough scheme was set up to take the sting out of the global pandemic which saw global economies shut down almost overnight. Thus began a period of quarantine like no other in history and with it our economy entered a state of limbo until it was safe to emerge. Now in our deepest recession in history we begin our farewell to the furlough scheme.

As the Scheme draws to a close in October, many businesses and employees can still benefit from the now flexible scheme albeit with a much more noticeable cost to the employer as follows:

  • 1 July, flexible furlough introduced. Four months following its introduction part time working for the furloughed employee was allowed for the first time. Despite other European countries like France and German allowing this level of flexibility from inception, thereby reducing cost to the government, the UK initially required all furloughed staff to stay home and not work. The government is to pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions (Employer NICS) and pension contributions for the hours the employee is on furlough. Employers pay employees for the hours they work as normal.

  • 1 August, the government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay ER NICs and pension contributions for the hours the employee is on furlough

  • 1 September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers continue to pay Employer NICs and pension contributions. Employer’s will also have to top up employees’ wages by 10%, up to £312.50, to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed

  • 1 October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages by 20%, up to £625, to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed

  • Employers can still choose to top up employee wages above the 80% total and £2,500 cap for the hours not worked if they wish.

  • Employers will have to pay their employees for the hours worked – flexible furlough.

  • The Scheme ends on 31 October 2020.

It is estimated that the scheme has cost the government £14bn per month and while there remains criticism that the scheme originally did not allow employees to do any work, resulting in huge cost and a halt to business, it has delayed for many employees the necessity to resort to having to rely on the significantly lesser income provided for under Universal Credit. It is more than likely that together with other measures from the government some businesses have been saved from collapse when income suddenly ceased. However, not all businesses can be saved or have been saved and some industries like aviation, leisure and hospitality have been severely hit. For some though, the furlough scheme just delayed the inevitable mass redundancies leading to record high levels of unemployment, and risks being seen as an expensive scheme that ultimately may not have saved the economy.

For advice on redundancies, changes to terms and conditions of employment and other employment law matters contact Garden House Solicitors today on 01992 422128.

GARDEN HOUSE SOLICITORS

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Garden House Solicitors is the trading name of Garden House Solicitors Limited a Company registered in England No. 7546805 - VAT No. 880 3524 25

Registered Office 23 London Road, Hertford, Hertfordshire, SG13 7LG.

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Director: Patricia E Ling LL.B. (Hons)

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