Furlough has been extended until March next year - what it means for your pay
Furlough was originally supposed to come to an end last month, but it has since been announced that the scheme will be extended until the end of March, 2021.
The scheme, officially known as the Coronavirus Jobs Retention Scheme, allows for employees placed on leave to receive 80 per cent of their pay, up to a maximum of £2,500 per month.
Furlough is designed to subside the wages of those who cannot do their jobs due to the pandemic, either because their workplace has closed or because there is no longer any work for them.
This is what you need to know about the latest furlough announcement.
Has the furlough scheme changed?
Furloughed employees won’t notice much of a difference this time around, however employers will as this updated version of the scheme will be more generous as businesses will pay less.
As part of the revised furlough scheme, employees who were previously made redundant after 23 September can be rehired and placed back on furlough.
Businesses have the opportunity to use the scheme for employers no matter their contract - this means full time employees, part time employees, temporary employees and zero hour staff can all benefit.
Employers will only be asked to cover National Insurance and employer pension contributions for hours not worked.
The government states: “For an average claim, this accounts for just five per cent of total employment costs, or £70 per employee per month.”
Employers will also be able to claim the same way they did when furlough was first introduced, with employees being paid the same way too.
A grant for self employed workers, which covers November to January, is also increasing from 55 per cent to 80 per cent of trading profits, up to £7,500.
What did Rishi Sunak say?
Rishi Sunak, the Chancellor of the Exchequer, said: “I’ve always said I would do whatever it takes to protect jobs and livelihoods across the UK - and that meant adapting our support as the path of the virus has changed.
“It’s clear the economic effects are much longer lasting for businesses than the duration of any restrictions, which is why we have decided to go further with our support.
“Extending furlough and increasing our support for the self employed will protect millions of jobs and give people and businesses the certainty they need over what will be a difficult winter.”
Does the furlough announcement extend beyond England?
Initially, there had been confusion about whether the furlough extension would extend outside of England, with Scottish First Minister Nicola Sturgeon calling for clarification on the matter.
Sunak said that the intention of extending furlough through to March 2021 would “give businesses security through the winter”, and protect millions of jobs. He added that it would apply throughout the UK, which he said showed that the country “had a Treasury for the whole of the United Kingdom”.
It has been announced that the Scottish government has been given an “additional £8.2 billion to cope with the pressures of the pandemic” and that more than “123,000 jobs in Scotland [are being protected] through the furlough scheme”.
The Scottish First Minister said that “we should have had the ongoing assurance of 80 per cent furlough from the chancellor all along” following Sunak’s announcement.
An upfront guarantee of funding for devolved administrations has been increased from £14 billion to £16 billion, it has also been announced, which will support workers, businesses and individuals in Scotland, Wales and Northern Ireland.
Kate Forbes, the Scottish government’s finance secretary, said in a statement: “I welcome the chancellor’s positive, but long overdue, announcement that the job retention scheme will be extended until March 2021.
“We have repeatedly urged the UK government to safeguard jobs by guaranteeing that this support will be available for as long as employers need it.
“The upfront guarantee of further consequential payments to cover the rest of the financial year meets another of our long term requests and will enable us to quickly tackle the impacts of the pandemic in Scotland as they arise.”