Changes to the UK’s Furlough Scheme in September

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Wednesday, September 01, 2021

The UK government’s furlough scheme will be closing at the end of September. According to new figures, up to a million Britain’s face an uncertain future when the scheme ends.

The government’s job retention scheme threw a lifeline to workers who lost their employment during the pandemic and to businesses that could no longer pay employee wages due to reduced income. Sectors such as the airline industry which remain significantly disrupted by the pandemic are still highly reliant on the scheme. In sectors such as hospitality, it is estimated that there are about 300,000 workers without employment opportunities once the furlough scheme is over.

Initially, workers were paid 80% of their wages up to £2,500. In July, employers were required to pay 10% of salaries with the government’s contribution reducing to 70%. In August and September, this was again reduced to a government contribution of 60%. Employers were also required to cover staff pension and National Insurance contributions.

From March 2020 to September 2021, the scheme has cost about £66 billion, and it has helped save jobs. At the start of the pandemic, it was estimated one in 10 people would become unemployed but today the unemployment rate is currently less than one in 20.

What is Changing on September 30th?

 At the end of this month, employers will again be solely responsible for paying their employee wages, including for employees that remain in furlough. There are concerns this could lead to redundancies should an organisation be unable to afford to pay employees for hours they are not working. The Bank of England, among others, is forecasting a slight rise in unemployment when the scheme ends.

If your employer has decided to make you redundant, they should have discussed this with you already. On the other hand, your employer is not required to give you notice you are being called back into work, but it is recommended that they do so. If you haven’t heard from your employer, we recommend you get in contact with them as soon as possible.

There are also concerns the end of the furlough scheme could force workers into insecure and low paid jobs, or long-term reliance on other government support schemes. If you are at risk of redundancy, it is recommended you apply for other support schemes as soon as you can.

At the same time, there is a War for Talent in terms of skilled workers with the number of job vacancies in the UK currently at a record high level. What this means is that there is a mismatch between available workers and what positions are available. Some companies are pivoting to invest in reskilling and upskilling workers to fill vacancies.

Get in touch with Plus One

 At Plus One Personnel, we frequently work with our clients to assist with hiring and onboarding new staff. If you’d like any further advice on this matter, or on the questions around the furlough scheme ending and what this means for you as an employer, please contact us.

Alternatively if you are facing an uncertain future, Plus One can help you find your next career opportunity. We understand looking for a new job can be a stressful experience, and we are here to guide you through the process.

 

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