Changes to Furlough Pay - reduction from 80%

[ShredMeJillianIWantToBeNatalie]

A friend has received a letter from his employer - he’s been on furlough since end of March receiving 80% pay (no top up).

The letter says that going forward, if and when changes are made to the level of Government assistance under the scheme, his employer won’t be able to afford to make any contribution. So for example, the letter says, if the level of Government assistance is 60% then that’s what you get.

But my understanding of the proposal Sunak is putting forward is that the furlough scheme will be funded 60% Government plus 20% employer. Will the Government surely not say to employers that if they don’t fund the 20% they can’t have the 60% subsidised?

[IcyApril]

The government will quite possibly say that. Unfortunately I imagine a lot of people will be made redundant.

[Snagscardies]

No guidance out yet so anyone's guess. But if the company doesn't have the 20% to give and the 20% is a prerequisite to claiming the 60% then the only alternative is redundancy.

[ShredMeJillianIWantToBeNatalie]

I think redundancy would be preferable actually for personal reasons. He’s been there a very long time. The letter is very odd in many respects and I think they’ve misunderstood the furlough concept in other ways so I was surprised they sent it (and asked him to return it confirming his agreement [shrug]).

[ShredMeJillianIWantToBeNatalie]

But thank you. We will wait and see what is announced.

[TooTrueToBeGood]

I think a lot of employers will just lay people off rather than pay 20% when they are getting no revenue. The really sad part is it will impact the worse off much more than the better off. Companies will have to weigh up the cost of redundancy versus carrying the 20%. So people in well paying jobs with decent length of service will be far more likely to be kept on than those on low wages, part time or short service lengths.

[Discobar]

That company have completely jumped the gun there. All speculation at the moment. Chancellor said employees would still get 80%

I imagine companies will be means tested for contributions and government will subsidise where applicable.

November redundancies are to be expected when the scheme ends in October unfortunately

[Olliephaunt4eyes]

I think a lot of people are about to be made redundant and will be worse off as a result. Statutory minimum redundancy is one week's pay for each year you've worked there - many people won't get much and it'll be really really tough to find a new job in this climate.

I honestly think they'd be better off with just 60% pay but I suspect that won't be an option.

[ShredMeJillianIWantToBeNatalie]

He’s not paid a great deal but due to length of service his contractual redundancy pay is pretty good.

Yes I think jumped the gun is a good description. I honestly don’t think they understand the scheme though. They’ve got a few staff still working for them (physically going in to work) and following a conversation my friend had earlier this week it sounds as though they’ve been claiming furlough pay for them .

Thank you.

[ShredMeJillianIWantToBeNatalie]

Ollie yes he could manage on 60% I think. But I can’t see a situation where the Government will just agree to funding 60% without any contribution. And I guess so many couldn’t manage. So some difficult choices to be made.

[matchboxtwentyunwell]

I think it's going to trigger a lot of redundancies.

[Oblomov20]

When will guidance be released, do we think?

If it a pre-requisite? That Employer can only claim the 60% if the Employer agrees to pay the employer the other 20%, making it up to a total of 80%?

[Waxonwaxoff0]

Just been announced that 80% will be paid until September but employers will have to pay NI and pension contributions from August.

[Discobar]

UK Chancellor Rishi Sunak is outlining changes to the furlough scheme during the daily press briefingSunak says in June and July the furlough scheme will continue as before, but employers will be asked to cover National Insurance and employer pension contributions in AugustBy September, businesses will pay 10% of wages for furloughed staff, and in October 20%, the UK chancellor says

[chipsandpeas]

@ShredMeJillianIWantToBeNatalie

if theres no money in the pot then contractual redundancy payment may not be paid, could just be the statutory amount paid by the government

[Pinkiii]

@Waxonwaxoff0

Just been announced that 80% will be paid until September but employers will have to pay NI and pension contributions from August.

That sounds good on paper, but not sure how it would work in reality, a lot of the companies who have furloghed staff have had no income so where would they be getting this money from? ( not having a go, just putting the question out there)

So for example my work is in the aviation industry and we have been one of the ones hit the hardest, I can’t see my employer picking up NI and pension as we have had no money coming in since March and we have been told to expect redundanciesz

[manicinsomniac]

My work is making up the 80% government pay to 100% at the moment. We only have about 30 staff furloughed though and quite a lot of them are coming back from Monday.

I don't know if we could afford to pay 40% but prob wouldn't need to as we're a school so will (hopefully!) need all the staff from Sept.

[ky07]

I think it would have been beneficial to keep the furlough contribution at 80% for any companies that do bring their workers back part time e.g. if the employee works at least 1/5 of their usual hours in the month paid for by the employer, the govt will cover the furloughed hours at 80%. As it is surely some companies (who have been hit by this but will still be functional) will probably still choose to save more money by keeping staff fully furloughed for a while longer until things pick up more?

[Waxonwaxoff0]

@Pinkiii I expect that by August they will order all businesses to reopen again including aviation. There will still be many redundancies though. I'm expecting it myself as the business I work for is only operating at about 40% of our usual revenue and I can't see it picking up by August.

@ky07 that is what they are doing from July. Employers can bring their staff back to do part time hours if needed and the government will cover the rest at 80%.

[ky07]

@Waxonwaxoff0 I thought the 80% was being reduced between August and October though regardless of whether the employee works part time?

[Waxonwaxoff0]

@ky07 ah I see, yes I think you're right there. Reduced to 70% in September and 60% in October.