Three changes to furlough starting from Saturday – including how much employers have to pay

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FURLOUGH is changing once again this Saturday, August 1, as the government prepares to wind down the coronavirus support scheme.

Over 9.5million workers have been placed on the furlough scheme, which sees the government cover 80 per cent of wages up to £2,500 a month.

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The initiative closed to new workers in June but those still on it can continue to get government funding until October 31.

But in order to get this support from next month, your employer will have to start contributing too.

It won’t affect a furloughed worker is paid but it has lead to fears from many industry insiders, including MoneySavingExpert founder Martin Lewis, that employers will start making hundreds of thousands of Brits redundant if businesses can’t afford payments.

The government hopes to combat this with the by paying employers a £1,000-bonus who take back furloughed workers and employ them continuously through to January 31, 2021.

Each worker must be paid at least £520 per month on average, and bosses will get the cash bonus from February 2021.

The furlough scheme has already been tweaked this month to allow employees to start working part-time for bosses.

Up until July 1, you couldn’t work for your employer while furloughed – and you had to be on the system for at least three weeks at a time if you were re-employed in between.

But further changes are also afoot – here’s what you need to know.

Businesses will start picking up the furlough bill on August 1 when they have to pay national insurance (NI) and pension contributions. 

This represents about 5 per cent of employment costs per worker for businesses. 

For example, if your boss typically pays £2,200 towards your salary including NI and pension contributions, they’ll have to start paying £110 from August.

The government will continue to pay 80 per cent of staff wages up to the £2,500 a month cap.

From September, the government’s contribution will fall to 70 per cent of wages up to a cap of £2,187.50 a month.

This means employers will have to pay 10 per cent of salaries – up to £312.50 – to make up 80 per cent of wages in total up to a cap of £2,500.

Employers will also need to continue to pay NI and pension contributions. 

For the average claim, this represents 14 per cent of the employment costs.

In October, the government’s contribution will fall again to 60 per cent of wages up to a cap of £1,875 a month.

This will see businesses pay 20 per cent of salaries – up to £625 – to make up 80 per cent in total, up to a cap of £2,500.

In addition, employers will need to continue to make NI and pension contributions. 

It means employers footing the bill for 23 per cent of employment costs.

The scheme will then end on October 31.

Last week, manufacturers begged for furlough to be extended by six months and warned of massive job losses “like in the 1980’s”.

Martin Lewis has also helped to launch a campaign aimed at raising awareness for the millions of people excluded from coronavirus financial support.

Unemployment in the UK could TREBLE this year to 3million, the Office for Budget Responsibility (OBR) has predicted.

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