Furlough extension: Citizens Advice warn of ‘major missing piece’ of scheme – what to know

Furlough rules currently allow workers to have 80 percent of their wages covered by the state if the employer and employee come to an operational agreement. The Coronavirus Job Retention Scheme has been seen by many as a crucial lifeline for the struggling economy and last week, Rishi Sunak confirmed details on its extension and alterations.

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In mid-May, the Chancellor of the Exchequer outlined the following principals of his furlough scheme plans moving forward:

  • The furlough scheme will remain open up until October
  • The government will ask employers to start contributing to the scheme and flexible furloughing rules will be introduced
  • Employees themselves will see no change to their level of support

The changes brought with it a lot of discussion on exactly how the new rules would be implemented and last week, Rishi confirmed further details of the plans, as he explained during a daily briefing: “I believe it is right, in the final phase of this eight-month scheme…

…to ask employers to contribute, alongside the taxpayer, towards the wages of their staff.

“But I understand, too, that businesses and employers have been through an incredibly difficult time.

“So I have decided to ask employers to pay only a modest contribution, introduced slowly over the coming months.

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“In June and July, the scheme will continue as before, with no employer contribution at all.

“In August, the taxpayer contribution to people’s wages will stay at 80 percent.

“Employers will only be asked to pay National Insurance and employer pension contributions…

…which, for the average claim, account for just 5 percent of total employment costs.

“By September, employers will have had the opportunity to make any necessary changes to their workplaces and business practices.

“Only then, in the final two months of this eight-month scheme, will we ask employers to start paying towards people’s wages.

“In September, taxpayers will pay 70 percent of the furlough grant, with employers contributing 10 percent.

“In October, taxpayers will pay 60 percent, and employers will contribute 20 percent. Then, after eight months of this extraordinary intervention…

…of the government stepping in to help pay people’s wages, the scheme will close.”

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On top of these changes, Rishi detailed that a new “flexible furlough” would be introduced, which will allow employers and employees to utilise both the furlough scheme as well as regular working arrangements.

Many were quick to respond to the announcements and while a number of organisations found the extension to be prudent, Citizens Advice highlighted a worrying gap in coverage.

Dame Gillian Guy, the Chief Executive of Citizens Advice, highlighted that certain vulnerable workers have been left in a difficult position: “The furlough scheme has protected millions of jobs and incomes, but the failure to give additional protection for the shielded group means there is still a major missing piece of the puzzle.

“Many in this group fear their jobs will be the first to go as the scheme starts to wind down.

“One in ten people who are clinically extremely vulnerable are continuing to work outside the home despite the risk to their health, and thousands more are struggling to make ends meet because they have been denied furlough. No one should face this impossible choice.”

She went on to detail that employers of these specific individuals should face certain beneficial exemptions: “As long as the shielded group are asked to remain at home, they and those they live with should have a right to be furloughed and employers should be exempt from contributing to the cost of the scheme for these employees.”

The necessity of these types of schemes are still evident when looking at Citizens Advices own data:

  • Searches for the word ‘redundancy’ on the Citizens Advice website in May were up 35 percent on April (comparison is between search numbers for 1st-28th May and April 1-30).
  • Searches for the word ‘redundancy’ on the Citizens Advice website in May were up 51 percent on February (May 1-28).
  • Redundancy went from being the 7th most searched word on the Citizens Advice website in February to the 2nd most searched word in May. It was 3rd in March, 4th in April.
  • The number one most searched word in May was furlough (it was also number one in April).

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