Furlough scheme to be closed to new employees

29th May 2020
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This week we have been preoccupied with all the Cummings and goings of the government. With all the bedlam it’s been hard to focus on other things and what might have been missed is the news about the Coronavirus Job Retention Scheme, or furlough scheme to the layman.

Previously it had been reported that employers bringing furloughed staff back to work part-time from August would be liable for 40% of employee wages and if they were unable to do so they would not be eligible to continue with the scheme. But new information reports that this percentage has been reduced to 20% of staff wages (including National Insurance contributions). So that’s the good news.

The bad news is that, by the end of the week, Chancellor Rishi Sunak is set to announce that the furlough scheme will soon be closed to new entrants. This means that the government is planning to put a stop to companies adding new employees after a yet-to-be-announced date. 

This is to prevent companies from furloughing workers working full time and bringing them back part-time to save costs once it is allowed in August. Apparently, this is something that the Treasury seems to be worried about. If they’re worried about dishonesty they might want to take a look at their own government aides first before finger-pointing. 

But ANYWAY, there have already been calls for the government to give a lengthy gap between announcing the end to new applications and the cut-off date for that point. This is because a vast majority of employers who use the scheme are small to medium enterprises (or SMEs). At the moment the self-employment income support scheme (SEISS) has only been announced until the end of May and with the end of the month fastly approaching there has been no news on whether it will be extended or not.

SMEs have struggled more than most with all the changes and they will need extra time to plan if the scheme is retracted. Some businesses are only recently entering the scheme as they are just coming into difficulty so, again, if it is to be ended they will need to know as soon as possible.

Currently, employees receive 80% of their wages (up to £2,500) from the government, with the additional 20% optional to be topped up by employers. This has been extended until the end of October with employees being allowed to return to work part-time with full wages for hours worked from August onwards.

So now millions of people must once again wait with bated breath as the government decides their fate and let’s hope that the end of the week means the end of the week, just as much as Brexit meant Brexit.

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Aoibheann Byrne
 

Written by Aoibheann Byrne
BrightPay Payroll Software