Coronavirus is having a devastating impact across the world, with more than 404,000 people having now died from COVID-19. The pandemic is also hitting people financially, with the UK government announcing a number of emergency measures during the crisis.
Among them is the Coronavirus Job Retention Scheme – which has also been referred to as the furlough scheme.
The scheme enables employers to furlough eligible employees, meaning the government covers the cost of 80 percent of the employees’ salary up to £2,500 per month.
This is in addition to the associated Employer National Insurance contributions and pension contributions (up to the level of the minimum automatic enrolment employer pension contribution) on that subsidised furlough pay.
Last month, Chancellor of the Exchequer Rishi Sunak extended the scheme to the end of October, however he announced changes to it would be ahead.
Later, he explained the details of what would change – introducing a “flexible furlough” scheme which will take effect from July 1.
Additionally, employers will begin to be asked to contribute to the scheme.
It means that from this date, furloughed employees will be able to return to work part-time, but there will be no changes to the grant system at that time.
From August, employers will need to pay the ER NICs and pension contributions for furloughed workers, while the government continues to cover the grant for the 80 percent of the furloughed employee’s wages up to £2,500 per month.
Then, in September, the government will pay 70 percent of wages up to a cap of £2,187.50.
Meanwhile, employers will pay ER NICs and pension contributions and 10 percent of wages to make up 80 percent total up to a cap of £2,500.
From October, the government will pay 60 percent of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20 percent of wages to make up 80 percent total up to a cap of £2,500.
However, in the announcement, Mr Sunak explained that there would be a deadline for applying for the scheme.
From June 30, the scheme will close to new entrants.
And, from this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to June 30.
As such, today marks the cut-off for when employees would need to be furloughed by – something which Martin Lewis addressed during an appearance on Heart Breakfast with Jamie Theakston and Amanda Holden today.
“Today is actually a big day in the furlough scheme,” Martin said. “The rules state that for being furloughed after July – remember furlough now lasts until October – you have to be furloughed for three weeks by the start of July.
“Today is that day. So, if you’re not on furlough today, you can’t be furloughed afterwards.
“So this is the last day. Anyone who’s not furloughed now can’t be furloughed – with one exception that I managed to get the government announced late last night in time for my email because I’ve been lobbying on it for a week.
“I managed to get the government announced late last night in time for my email because I’ve been lobbying on it for a week.
“And that’s to people on maternity or paternity leave. Previously, if you were coming back from maternity or paternity afterwards, you couldn’t be furloughed, which I was arguing was discrimination.
“Because if your whole firm’s on furlough and you come back in the middle of July and they’re not allowed to furlough you, you’d probably lose your job.”
Martin went on to address that this would’ve been a significant problem, adding that the government made the confirmation to him regarding the exception last night, and further details are expected on Friday.
“That was quite a nice victory just at the end of the evening last night,” he said, before explaining schemes have been needed to be announced at rapid speeds.
Sometimes, there have been loopholes identified, with Martin pointing out a number of these to the government.
“Sometimes they say yes, sometimes they say no. Well, we got a yes last night, so that was good news.”
Heart Breakfast with Jamie Theakston and Amanda Holden airs weekdays from 6.30am on Heart.