Furlough – All Change for Employers
Just when we all thought we understood furlough it has all changed again – so what does it mean for employers?
A few months ago 'furlough' was a new word, but now we have all got used to 80% wages for furloughed staff to a £2,500 limit and an option to top up, but nothing lasts forever and business owners realised a tapering system was due to come in. However only recently the Chancellor, in what he says is an effort to kick start the economy and preserve jobs, has changed the goal posts.
As business owners here is what you need to know month by month:
June – the Government pays 80% up to £2,500, plus national insurance and pension contributions.
June 10th – the final date to furlough staff under the existing scheme.
June 30th - the scheme is no longer available to new entrants, so this means you cannot furlough anyone who has not already been furloughed previously. You can still re furlough staff.
July – staff can return from furlough on a part time basis if the employer decides it’s in the best interest of their business. The big question here is what about the wage deficit – who makes this up? Further Government guidance is expected on this.
August – Tapering starts – 80% of wages still paid by Government, but employers now have to pay national insurance and pension contributions.
September – 70% of wages are paid by Government up to £2,190. Employers must make up 10% of wages for their staff, plus pensions and national insurance.
October – 60% of wages are paid by Government up to £1,875 with a 20% employer contribution of pensions and national insurance.
For the self employed grants are being cut and funds are capped at £6,570
“Furlough has no doubt been a lifeline to many businesses and many clients tell me it has kept them going, but now as the financial burden it set to be shared between Government and business owners it will be a testing time for many,” said Pearson Head of Employment, Susan Mayall.
“I am sure that in August some businesses will not be able to make up the balance and that will no doubt be when the economic reality of coronavirus kick in,” she added.
Susan Mayall has worked in employment law for many years and has been working hard with businesses of all sizes on how they can deal with the Covid-19 crisis and what it means for their staff.
For advice all aspects on employment law contact the team on 0161 785 3500 or email enquiries@pearsonlegal.co.uk
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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.
