At the end of May, 2.4 million people still relied on the furlough scheme for their income, the latest HMRC figures show. The furlough measures are being phased out by the end of September, but with parts of the economy still limited by the virus, some firms are calling for an extension to the scheme.
Over the next 3 months, firms will have to shoulder more of the costs of the scheme as the government starts to wind down its support. Staff will continue to receive 80% of their wages, but employers will have to pay part of that for the first time.
Since last March the government has paid 80% of the salaries of employees (up to a maximum government contribution of £2,500 per month) – with the employers only having to pay the employer National Insurance and pension contributions.
From July 1st the government will only pay 70% of the furloughed employee’s salary, so the employer has to pay 10% of the salary themselves. In August and September, employers will have to pay 20%, with the governments picking up 60%. Furloughed employees will continue to receive 80% of their wages including the employer contribution.
According to the IFS, the bill for employers keeping a member of staff on the scheme will rise significantly, putting jobs at risk. For a furloughed employee previously earning £20,000 per year, the cost to an employer retaining them will rise from £155 per month in June to £322 in July, and £489 per month in August and September, after which the scheme is due to end.
The latest data from the Institute for Fiscal Studies (IFS) shows that at the end of April 3.4million jobs were still on furlough so the change to furlough will affect thousands of employers across the country.