Depending on your definition of success, the Coronavirus Job Retention Scheme has certainly been a success with around eight million workers furloughed so far, nearly a million businesses using the scheme, and with costs totalling around £80bn.
However the Chancellor is set to announce this week that the UK government will soon bar companies from putting any more employees into its furlough scheme. At the same time, we expect further details to be announced setting out the contributions that will be required from employers for the extension of the job retention scheme from the start of August and the rules extending it to furloughed employees who return to work part-time.
Businesses will be able to bring staff back to work part-time as the lockdown is eased, paying workers full wages for any hours worked while the rest will continue to be covered by the furlough scheme for the hours they don’t work.
But the Treasury is planning a cut-off date to prevent companies from furloughing current full-time workers and then bringing them back part-time in August. After the cut-off date, no employees would be allowed to join the scheme.
We would hope that that companies would be given some time to arrange their affairs before any cut-off was imposed. The Treasury accepts there is a risk that employers could then furlough millions more workers so they could then bring them back part-time, but said this risk should not be exaggerated because the number of furloughed workers – roughly a quarter of the total jobs in the UK, was now relatively stable
So what will the changes likely mean?
Currently, employees receive 80% of their normal pay up to a cap of £2,500 a month, with employers fully compensated for pay, employer national insurance contributions and pension contributions. After August, the Chancellor has said he would expect employers to pay a contribution towards the continued costs most likely to be 20% according to the draft plans.
This would mean that from August 1, the government contribution for each employee would fall to 60 per cent and would apply to both full-time and part-time workers. Employers would also have to restart paying National Insurance, although the government would still cover pension contributions.
It will still be up to employers whether they choose to make up the remaining 20 percent.
The Chancellor has said this next stage would involve ‘flexible furloughing which I hope will help get us back up and running’.