As part of the road to recovery, employers will be expected to pay 20% of furloughed employees’ wages under plans announced by chancellor Rishi Sunak.
Since the start of May the number of furloughed employees has risen by a quarter to reach 8.4 million, according to Treasury figures. And HMRC has revealed that more than £6.8bn has been claimed via 2.3 million applications from those who are self-employed and unable to work.
The Treasury has also granted more than 43,000 businesses about £9bn in coronavirus business interruption loans to support them through lockdown. A further £18.49bn has been granted in “bounceback” loans to 608,000 small businesses.
Government ministers and business leaders recognise that when the furlough scheme is wound down some of those workers currently furloughed will not have jobs to go back to. The plan is to encourage firms to at least bring those workers already furloughed back part-time to ease them back into business while reducing the cost to the taxpayer.
Last week Sunak told the Lords Economic Affairs Committee that it was not obvious that there would be an immediate bounce-back. He added: “Obviously the impact will be severe. We are likely to face a severe recession, the likes of which we have never seen.”
Meanwhile, new figures from the Office for National Statistics (ONS) indicate that people with low household incomes have been spending more time doing paid work since the lockdown began than previously. Those with monthly household incomes of up to £1,700 have spent an extra 21 minutes a day on average doing paid work, compared with a drop of about 32 minutes for those on monthly incomes of between £1,700 and £3,300.
The ONS said the increase in working time for people on low household incomes could be because they were more likely to be in jobs that could not be done from home and have had to continue going into work.
Various aspects of life in the UK between March 28 and April 26 this year were examined by the ONS in the study and contrasted with data from 2014-15. It also found that men had reduced their work and travel time by one hour and 37 minutes a day on average, compared with one hour and two minutes for women.
The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June.
This means that the final date by which an employer can furlough an employee for the first time will be 10 June, in order for the current 3 week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.
From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked. When claiming the CJRS grant for furloughed hours employers will need to report and claim for a minimum period of a week.
Regulations around collective redundancies mean that where an employer is proposing to make 100 or more employees redundant, it needs to consult for at least 45 days. The minimum period is 30 days if the employer is proposing to dismiss between 20 and 99 employees. This suggests that companies considering mass redundancies because of the slimmed-down furlough support from the government could start announcing job losses as early as mid-June.
From August, furloughed staff will be able to return to work part-time, which many commentators have said will help gradually restart operations at some businesses.
Some 8.4 million workers have been furloughed so far at a cost of around £15bn, but the Office for Budget Responsibility expects a total overall cost of £80bn.
If you’re looking for advice on this subject and want to know how the changes will impact your business.
Contact us by completing our secure contact form
Alternatively call us direct on 01243-607357, or email [email protected]
