The government have announced changes to the furlough scheme that include a change to what your employer has to pay as well as the option to furlough workers on a part-time basis. We at the union have dug into the legislation so you don’t have to!
Unfortunately moving forward there can be no new claimants and employees can only claim if they received furlough for three consecutive weeks between March 1st and June 30th.
Changes to government contributions
Below is a table of the changes to the contributions that the government and your employer have to make.
|Government contribution: employer NICs and pension contributions||Yes||No||No||No|
|Government contribution: wages||80% up to £2,500||80% up to £2,500||70% up to £2,187.50||60% up to £1,875|
|Employer contribution: employer NICs and pension contributions||No||Yes||Yes||Yes|
|Employer contribution: wages||–||–||10% up to £312.50||20% up to £625|
|Employee receives||80% up to £2,500 per month||80% up to £2,500 per month||80% up to £2,500 per month||80% up to £2,500 per month|
In July, employees can continue to be furloughed without it costing the employer a penny; the government will continue to make national insurance and pension contributions.
Starting in August, the government will still pay 80% of the employees wages up to £2500, however the employer will have to pay National Insurance and statutory pension contributions for the hours that the employee is furloughed. This equates to employers paying around 5% of what they were paying before the crisis.
In September the amount the government will pay drops to 70%, with employers having to pay the additional 10%, along with National Insurance and pension contributions. This equates to around 14%.
In October, the final month of the scheme, the amount drops again to 60%, with employers having to pay the additional 20%, plus National Insurance and pension contributions. This equates to 23% of what employers were paying before the crisis.
The good news is that the scheme is now more flexible allowing employees to return to work on a part time basis and have their earnings topped up by furlough. Flexible furlough is not based on earnings but on hours worked now compared to your ‘usual hours’.
If you work variable hours your ‘usual hours’ are calculated using either:
- the average number of hours worked in the tax year 2019 to 2020
- the corresponding calendar period in the tax year 2019 to 2020
This should include overtime AND annual leave hours.
Example calculations can be found here: https://www.gov.uk/government/publications/find-examples-to-help-you-work-out-80-of-your-employees-wages/examples-of-how-to-work-out-80-of-your-employees-wages-national-insurance-contributions-and-pension-contributions#variable-hours
Employers should take their employees ‘usual hours’ and subtract the hours worked during the current pay period to calculate the number of hours employees should be furloughed for. There is could be for as little as one hour
In July there is NO reason why employers should not apply for furlough to top up workers pay as they do not have to make NI or pensions contributions for that furlough amount. However, from August, employers will have to pay NI and pension contributions on the furloughed amount and from September a percentage of it. Sadly, this could mean that employers do not want to, or simply cannot afford to apply for the flexible furlough scheme on behalf of their employees, from August.
If you’re having any problems at work related to furlough, potential redundancies, or anything else, please get in touch at tefl [at] iww [dot] org [dot] uk. The union’s go your back!