As more businesses reopen to welcome the ‘new normality’, the coronavirus job retention scheme (CJRS) has slowly started to ease out, despite one in eight workers still being covered.

The scheme launched earlier this year amid the pandemic, and has allowed employers with staff on a PAYE scheme to furlough workers, with the Government covering 80% of their pay.

From this month, however, the grant will decrease to 70% for the time an employee is on furlough.

Recently, the Office for National Statistics (ONS) announced that between 27 July and 9 August 2020, 12% of workers were placed on furlough leave, with that figure rising to 71% for the 4% of businesses that were temporarily closed or had paused trading.

The ONS also revealed 67% of employees who were furloughed were receiving top-ups to their pay from their employers.

If your employees are receiving furlough pay under CJRS, you'll need to prepare to cover more costs as the scheme tapers off and eventually comes to an end on 31 October.

How is the furlough scheme changing?

Despite the number of people still on furlough, the UK government announced some changes to the scheme, gradually decreasing the level of support offered.,

Throughout August, CJRS continued to pay 80% of wages up to £2,500 for the hours furloughed employees were contracted for, but employers were required to cover national insurance and pension contributions.

For the month of September, the grant will decrease to 70% of wages up to a cap of £2,187.50 for the hours employees are on furlough.

The grant is then due to decrease to 60% in October for wages up to a cap of £1,875 for the hours the employee is on furlough.

For employers, this means higher costs as they have to pay pension contributions and national insurance, as well as topping up employees’ salaries to ensure a guaranteed 80% of their monthly wage, with a cap of £2,500.

Will the scheme be extended?

Commenting on the ONS furlough statistics, Mike Cherry, national chairman of the Federation of Small Businesses, argued in favour of an extension to the scheme.

He said:

"The option of a meaningful extension to the furloughing initiative should be kept open, especially now local lockdowns are a fact of life and a meaningful second spike in coronavirus infections is possible."

Carsten Jung, senior economist at the Institute for Public Policy Research (IPPR), said the early end of the furlough scheme will mean “cutting support” for jobs while the economy is only beginning to gather speed.

Jung said:

“Hitting the brakes at this time is counterproductive, as it pushes people into unemployment when their jobs could be saved.

Clare McNeil, IPPR associate director for work and the welfare state, added:

“The Chancellor has said he will never accept unemployment as an unavoidable outcome. But by ending the job retention scheme too early, and with no plan for protecting jobs in local lockdowns or a second wave, that is precisely what is happening.

“Up to two million jobs could be lost, not because business owners are not working hard or smart enough, but because of continuing social distancing measures. 

Independent public body Acas also reported a 160% increase in redundancy-related calls to its helpline in the past few months compared with the same period in 2019, and said fears around the tapering furlough scheme had contributed towards this figure.

On 8 July, Chancellor Rishi Sunak said in a statement to MPs: “Furlough has been a lifeline for millions supporting people and businesses to protect jobs. But it cannot and should not go on forever.

“It gives people false hope that they would be able to return to the jobs they had before.”

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