What do the Furlough Scheme changes mean for my business?
Posted on 12th June 2020 at 11:15
Since March the Government have supported businesses through a Coronavirus Job Retention Scheme, where they have been given the option to Furlough staff in order to keep people in employment whilst the country is experiencing some of the most challenging conditions we have experienced in many years.
The current Furlough scheme offers businesses 80% of wages up to a cap of £2,500 with company national insurance paid for by the government, they also cover the standard employee pension contribution costs. This scheme will continue until the end of July 2020.
How the Furlough scheme will change.
Since 1st July – businesses have had the flexibility to bring furloughed employees back to work as part of the government’s plan to reopen the UK and kick start our economy. Employers can bring people back into the business on a part-time basis, are liable for all costs whilst they are working, and can claim a percentage back up to the % cap in place at the time. In September this will be 70% and October this will be 60%.
From 1st August – the 80% of wages up to a cap of £2,500 will continue to be paid but as a business you are now responsible for National Insurance Contributions as well as the Employee Pension Contribution costs.
From 1st September – The 80% is reduced to 70% and you are required to bridge the gap to 80%.
From 1st October – The government will give you 60% of the employee’s salary but you are now required to bridge the gap by 20% to make it up to the 80%.
Additional support for keeping people in work
On 8th July Chancellor Rishi Sunak announced additional support to help people to stay in work as well as to get work.
The new Job Retention Bonus gives a cash payment of £1,000 to employers who bring Furloughed staff back into the business and continue to pay them up until the end of January 2021.
There is also additional funding for young people looking for work called the Kick Start Job Creation Scheme for Young People. The fund will subsidise six-month work placements for people on Universal Credit aged between 16 and 24, who are at risk of long-term unemployment. The scheme will open for applications in August and run until December 2021. There will be an option to extend.
For employers that hire people under an apprentice scheme you can claim a bonus of £2,000 or for over 25s, £1,500. You need to apply for this between August and January 2021. These payments will be in addition to the existing £1,000 payment the government already provides for new 16-18 year-old apprentices, and those aged under 25 with an Education, Health and Care Plan – where that applies.
What does this mean for your business?
It is really important to be aware of your liabilities if you have people on Furlough. Considering the structure of your business going forward will not always be an easy decision to make but will need to be done to ensure that you can continue to survive.
The additional schemes that have been offered by the Chancellor will support a business that is looking to grow. The opportunities to keep existing employees as well as to bring in new resources are there from a number of different options including the apprentice schemes and Kick Start Job Retention Scheme for Young People.
If you would like to discuss any of these issues with us please get in touch on 0121 550 8509 or email email@example.com.
Tagged as: Job Retention Scheme (Furlough)
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