As of  September 1st 2020, employers will need to pay more towards the cost of furloughed employees.

Until now, the UK government has contributed 80% of the employee’s wage – capped at £2,500. That contribution has now dropped to 70%, with employer’s making up the extra 10%. Employers must also pay National Insurance and pension contributions, a change that came into effect in August.

In October, the scheme will enter its final phase. At this point, government contributions will drop to 60% and employers must pay the remaining 20%. It should be noted that this only applies to the time an employee is on furlough leave. From July 1st, employers have been able to bring furloughed employees back on a flexible basis. Any time an employee works must be paid at full wage by the employer, with no contribution from the government.

The scheme is scheduled to end on October 31st.

Furlough leave: employer considerations

As the cost of furloughed employees rises, many businesses still affected by the coronavirus pandemic will no doubt be making some difficult decisions. The government has announced an incentive for employers, with a £1,000 bonus available for each employee brought back from furlough leave who remains employed at the end of January 2021. However, widespread redundancies are still expected.

If you’re reviewing the options available to you, then our employment team can help. Redundancy is a difficult situation to manage, but mismanaging it can lead to compensation claims that far outweigh the savings made by decreasing headcount. From calculating redundancy pay (which for furloughed employees must be calculated using their full wage) to the consultation and selection process, our employment experts can help guide you through. Get in touch with our team today for a free, confidential chat on 01296 318 500 or email law@pandcllp.co.uk.

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