Furlough changes from today as Rishi Sunak winds down scheme – your pay explained

4 mins read

Furlough, or the Coronavirus Job Retention Scheme (CJRS) as it is formally known, has helped over 10 million people throughout the pandemic. Through the scheme, the Government provided organisations with a percentage of their employees’ wages to allow them to retain staff even when businesses were forced to close. It enabled workers to continue to have an income, even if they were unable to work due to COVID-19 restrictions.

However, the Government has said the tide is now turning against the pandemic, and it has lifted many of the restrictions Britons became familiar with.

It is also gradually removing support such as furlough, with today serving as an important date in the calendar.

While furlough formally comes to a close at the end of September, the Government is stepping back its support, dropping the percentage it offers through payments.

The Government website explains: “From August 1, 2021, the Government will pay 60 percent of wages.

READ MORE: Pension Credit: How to apply as over 75s set to pay TV licence fee

Many people may be worried about how these changes will impact their pay.

But it is important to note the amount a person gets through furlough should not change under the law.

This is because employers are required to foot the additional financial bill to ensure their workers have security.

Employer will now be required to provide Britons with 20 percent of wages up to £625 per month.

They must also meet pension and employer National Insurance contributions alongside this.

Some organisations may choose to top up a person’s wages above the 80 percent total and £2,500 cap for hours not worked.

However, this will be done at a company’s own expense, and so employees should not expect this automatically. 

The impacts of the end of furlough, though, cannot be denied, and it will be a major change after over a year of support. 

Recently, an observation report from the Institute for Fiscal Studies (IFS) looked at the impacts of furlough coming to an end.

It warned the withdrawal of Government support is likely to have significant consequences for those on the scheme. 

The report states: “We therefore expect to see rising redundancies over the summer, even before the final end of the scheme.

“It will mean big income losses for many of those who end up unemployed unless they are swiftly able to find alternative employment.

“There are two types of furloughed employees who are going to see big drops in the amount of support they get from the Government if they become unemployed.

“The first are those who, whatever their previous earnings, have a relatively high earning spouse or significant level of savings, meaning they will qualify for little to no Universal Credit.

“The second type are middle or higher earning individuals. Under furlough, they got more support in cash terms than furloughed lower earners.

“But under Universal Credit, their previous higher levels of earnings do not make them eligible for any extra support.”

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