UK employers to be asked to pay 'up to 30% of wages from August' as furlough winds down

Businesses will have to pay at least a fifth of the wages of furloughed employees from August, despite the Government extending the scheme to October, it's been reported.

Chancellor, Rishi Sunak, is expected to this week announce latest changes to the scheme - which will include firms covering 20% to 30% of workers' wages as it's wound down.

Under new terms being drafted up, employers will be allowed to take furloughed workers back part-time, and all firms using the coronavirus job retention scheme will be required to make the payments, even if they remain closed, according to The Times.

A Treasury source told the publisher: "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."

Sunak has already said the furlough scheme will be in place until at least October, however, asking firms to foot a higher bill could in effect force many employers consider job cuts.

The Treasury will reportedly direct employers to cover between 20% and 30% of an employee’s wage, plus national insurance, at 5% on top.

The furlough scheme pays 80% of a worker’s salary up to £2,500 a month, and is supporting about 7.5million jobs, representing about a third of the private-sector workforce.

The Office for Budget Responsibility has already warned the scheme could cost up to £80billion.

All high street businesses were ordered to close on March 23 after the UK went into lockdown following a surge in coronavirus cases.

Employees across the UK were told to work from home where possible, leading employers who were facing significant losses to apply for help via the Government's furlough scheme.

As part of efforts to wind it down, those who are unable to work from home are now being advised to return to work - though without using public transport where possible.

This will be followed by schools on June 1 as lockdown measures are further eased.

Latest retail figures on Friday showed that retail sales dropped a record 18.1% in April on the back of hundreds of thousands of branch closures.

An estimated 20,000 stores will be lost by the end of the year, according to figures from the Centre for Retail Research, a massive jump on the 4,547 that closed in 2019.

The research suggests the effect of the pandemic on Britain's town and city centres will hit the industry for the rest of the year.

Laura Ashley became the first major chain to go bust in March after its debt woes were accelerated by the pandemic.

Retail giants Oasis, Warehouse and Cath Kidston have all collapsed, while Clarks, Office, T.M Lewin and patisserie Le Pain Quotidien are all reportedly in talks for survival loans.

Speaking in the House of Commons earlier in May, Rishi Sunak said: "Until the end of July there will be no changes whatsoever. Then from August to October, the scheme will continue for all sectors and regions of the UK but with greater flexibility to support the transition back to work.

"Employers currently using the scheme will be able to bring furloughed employees back part-time. And we will ask employers to start sharing with the government the cost of paying people’s salaries.

"Full details will follow by the end of May, but I want to assure people today of one thing that won’t change: workers will through the combined efforts of Government and employers continue to receive the same level of overall support as they do now at 80% of their current salary up to £2,500 a month."