What Happens After Furlough Scheme? Will the Scheme be Extended?

Have you ever thought about what happens next when furlough scheme comes to end? More than 9 million workers are currently on the furlough scheme and counting…

Being on that scheme means it’s the Government forking out the bill for the majority of your salary while the business is not doing enough trade for it to be economical for you to work. Sounds great for those who haven’t met it yet… and the first few months probably felt quite comfortable but for those still on the scheme it doesn’t feel very comfortable now knowing the Government won’t be paying your salary forever.

The Pandemic is still active and spreading throughout the population. Maybe Covid-19 is not spreading as fast as before but until we see zero new cases, it will be fearful for everyone especially those who has underlying health conditions.

The Furlough scheme was designed to help people who couldn’t work because the pandemic had reduced the employer’s takings to retain their employment status. The Government has paid up to 80% of employee salaries up to £2500 a month since April 2020. This has provided employees with greater job security and the Government has avoided millions of people being made redundant.

It’s coming to end…

The Furlough scheme has been gradually phased out with employers having to meet more of the employee’s salaries, and will end in October 2020. Firms started paying National Insurance and Pension contributions for their workers since 1st of August 2020 and Employers will pay 10% of the salaries in September and 20% in October as well as paying employees National Insurance and Pensions.

This has provided a buffer for businesses to get back on their feet and gradually begin paying for their own employees again. However companies that are still struggling may need to make tough decisions about offering employees returning from the scheme redundancy as Boots and John Lewis have announced in July.

Will the scheme be extended?

The current system will continue to support businesses and employees until October but the Government have clearly stated it can not continue further into the winter months. Trade unions, some companies and opposing politicians have asked the Government to extend the scheme and prevent mass unemployment. At the time of writing this article there is a lot of talk that we are on the brink of a second wave coronavirus outbreaks, and the Government may be forced to extend the Furlough scheme whether they would wish to or not.

Up to the end of July employers have claimed over £30 billion, and it is estimated to cost over twice this by the time the scheme finishes in October. The Government doesn’t have unlimited sources of money and to extend the scheme will be very costly. We will have to pay for it sooner or later through taxes and reductions in Government spending.

Can your employer end your employment while on furlough?

Unfortunately yes. Employers can make you redundant at any time of the furlough scheme. The fear is that there will be mass redundancies when the scheme ends.

To minimise the risk of mass redundancies the Government have promised to pay companies £1,000 for each employee that has been in the Furlough scheme that they keep until January 1st 2021. In order for the companies to receive this bonuses these workers will have to be paid a minimum of £520 each month.

Can you work while on Furlough?

At the beginning of the scheme you couldn’t work while on furlough but this has changed now. You can now be called in to work at reduced hours, with the balance being made up from furlough claims, or for training and development tasks. Your employer has to have completed an appropriate risk assessment and ensure measures are in place to keep contact with other staff and customers to a minimum.

Can I get sick pay on furlough?

The purpose of the furlough scheme was to provide you with continued employment despite businesses being unable to trade. This means that all your employment rights include sick pay, maternity pay, holiday accrual etc. are also retained. If you are on unpaid leave, have caring responsibilities, in quarantine or are shielding you are also eligible for the scheme however it is up to your employer to apply to the Government for funding and they are not obliged to do so even if you would prefer this.

Can I do voluntarily work while on furlough?

You can work voluntarily as long as you are not being paid or breaching any contracts while you do this. You can even apply for and take up a new job, particularly if you fear your current employment may be at risk of redundancy.