Furlough is an arrangement announced by the government in March, which saw the Treasury cover 80 percent of employees’ wages up to £2,500. The Coronavirus Job Retention Scheme, as laid out by the Chancellor, Rishi Sunak, is intended to be a scheme to help keep Britons employed during the coronavirus pandemic. As a result, employers who opted in to the initiative are not required to meet the salaries or wages of employees for the furlough period, now extended to October.
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However, recent reports have suggested employers will now be required to pay a quarter of the wages of their furloughed employees from August.
Mr Sunak is expected to announce this week that employers will have to meet some of the costs associated with the scheme, according to The Times.
It has also been stated Mr Sunak will permit employers to take furloughed workers back part time for as many hours a week as they would like.
The Times report also suggests all employers who use the furlough scheme, even if remaining closed, will be required to make the payments.
Under the new plans, companies will also be required to pay National Insurance contributions – previously met by the government.
However, the Treasury is expected to continue to pay pension contributions.
The Office for Budget Responsibility has said the furlough scheme could end up costing up to £80billion, in what would be significant government expenditure.
The Treasury has not confirmed or denied the accuracy of reports, however it is understood officials have been briefed on the changes.
A source from the Treasury told the Times: “We’ve got two full months of support left and afterwards the government will help to pay people’s wages, but it’s fair to everyone that businesses contribute as they get back to work.”
The furlough scheme extension to October was originally thought to be a move to protect jobs.
But with additional costs now having to be met by employers, there are fears of job losses.
In effect, the changes to the scheme could force companies to assess whether certain roles are reliable.
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Citizens Advice has confirmed Britons can still be made redundant while on furlough, as the scheme is only voluntary.
Furlough does not, however, affect redundancy pay rights if employees lose their job as a result of coronavirus.
Employers must carry out a fair redundancy process, and provide their workers with a consultation.
Statutory redundancy pay is also available for those who have been working at a company or organisation for at least two years.
Mr Sunak has warned there are likely to be severe economic impacts as a result of the coronavirus crisis.
Speaking to the Lords economic affairs committee, the Chancellor warned Britain could face a recession “the likes of which we haven’t seen”.
However, Mr Sunak also expressed his “hope” that the country could rapidly recover from the fallout.
He said: “It is not obvious that there will be an immediate bounce back.
“It takes time for people to get back to the habits that they had. There are still restrictions in place.
“We are clearly dealing with something that is unprecedented, so economic forecasting is less precise than it would be.”
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