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Coronavirus Guidance: What the ‘Furlough’ scheme changes mean for you

Photograph of Nick Renaud-Komiy

Written by Nick Renaud-Komiya , Personal finance specialist

9 July 2020

From July, employees can return to work part-time while still benefiting from the Government’s furlough scheme. What does this mean for you?

Furlough Written on paper and Magnified

As things change rapidly during the coronavirus (COVID-19) crisis, this guide will be updated regularly to reflect changes in rules and regulations.

The UK Government’s Coronavirus Job Retention Scheme (CJRS) was set up earlier this year to combat the economic impact of the COVID-19 crisis.

Businesses who have put their employees on furlough can currently claim grants to cover 80% of their employees’ salaries, capped at £2,500 per month. This is to allow businesses to remain solvent without having to make staff redundant.

Read how the Coronavirus Job Retention Scheme works.

Latest changes to the scheme

Job Retention Bonus

On 8 July, Chancellor Rishi Sunak announced more changes to the Coronavirus Job Retention Scheme.

The government is now offering employers a £1,000 bonus for every employee they keep on for three months when the furlough scheme ends in October. They will need to be continuously employed through to January 2021 and the employee must be paid at least £520 per month on average.

Kickstart Scheme

In conjunction with the Job Retention Bonus, the government has also committed £2bn for the the Kickstart Scheme, which will reward employers that create new jobs for 16-24-year-olds.

These new jobs will require employees to be paid for a minimum of 25 hours per week. Employers can apply to be part of the scheme from August 2021.

Earlier changes to the scheme

Back in May, the chancellor announced that from August employers will need to pay a bigger share of the Scheme’s costs.

The measures were designed to gradually reduce the amount of a furloughed worker’s income coming from the government and increase the amount coming from an employer. Here are the main changes:

July

Furloughed workers can return to work part-time from 1 July 2020. Employers need to pay their wages for the time that they work and furlough them for the remaining hours. 

August

Employers will no longer be able to claim National Insurance and pension contributions from the government, so they will have to pay these costs out of their own pockets.

September

In September, employers can only claim 70% of wages, up to a maximum of £2,190 per worker. The employer has to pay 10% of regular wages.  

October

The last month of the CJRS will see the government paying 60% of wages, up to a maximum of £1,875 per worker. The employer will then have to cover 20% of regular wages. 

The scheme will end on 31 October 2020.

Find out more about the Coronavirus Self-employed Income Support Scheme

What do these changes mean for employees?

If you’re furloughed, you may not see a big change over the next couple of months.

If your employer chooses to take part in the Job Retention Bonus, they should ask you to return to work and keep you employed at least until January 2021. If your employer has not already got in touch with you about how these changes will affect your work and pay, it’s worth speaking to them. 

For more information read our employee guide to going back to work during COVID-19.

What do these changes mean for employers?

If you have employees that you have been able to furlough, you should let them know what these changes will mean for them as soon as possible.

These are very tough times for businesses of all sizes. It’s possible that over the next few months, you may have trouble meeting the costs of your part of your employees’ furlough pay.

There may be financial help available in the form of government-backed loans, based on your firm’s circumstances.

Read more about the financial help available for employers during coronavirus.

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