FURLOUGH is changing again as the Covid wage support scheme continues winding down.
From August 1 the government will cover less of your furlough pay and your employer will fund more – but what does that mean for your wages?
The Coronavirus Job Retention Scheme (CJRS) as it’s officially called, will end completely in September.
Today’s change is part of the government’s planned wind down of the scheme and follows a change last month too.
Employers have started shouldering more of the financial burden of furlough, and the government less.
The good news is that the amount you take home each month shouldn’t change, unless your company is topping up your furlough money so you get extra on top.
How will furlough changes affect my pay?
The scheme first launched last year at the start of the pandemic to save millions of people from losing their jobs as businesses were forced to close and the economy almost ground to a halt.
Anyone furloughed was given 80% of their wages up to a maximum of £2,500 per month and all of this was covered by the government.
From July 1 the rules changed and the government reduced how much it covered to 70% of wages up to a maximum of £2,187.50.
Employers then had to make up the difference – 10% – so everyone on furlough still got 80% pay, up to £2,500.
From August 1, the government contribution will reduce again and the amount companies put in will rise.
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The government will only pay 60% of furloughed workers’ wages up to a £1,875.
Your company will then have to pay the remaining 20% taking it up to 80% of your wages again, or £2,500.
One thing to note is that you could miss out if your company was voluntarily paying extra.
Some firms chose to top up the government payments so that employees received 100% of salary while furloughed.
They may decide to pay less than 100% because they have to cover more.
Now businesses have to foot more of the bill themselves, they may not be able to afford the extra payments.
This could put more pressure on companies and jobs and there are fears changes to the scheme could increase insolvencies and redundancies.
But generally, the extended scheme means that firms struggling due to the effects of the pandemic can continue to furlough you and recoup most of the costs from the government.
The number of people on furlough is now at a record low of 1.9million as the economy gets back on track – 3million fewer than in March this year.
More than half a million workers came off furlough between May and June alone as the country came out of lockdown.
