What do the new furlough rules mean for workers and businesses?

The Chancellor has announced several changes to the furlough scheme. 

Rishi Sunak said there would be second grant for self-employed workers in August, and revealed details of the contributions businesses will have to make to the furlough scheme until the end of October.

He also admitted the scheme cannot run ‘indefinitely’ as he set out new details during the daily coronavirus press conference at Downing Street.

But what does it all mean for workers and businesses? 

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What will happen to workers on furlough?

Furloughed workers will continue to receive 80% of their pay – up to £2,500 a month – until the end of October.

They will be allowed to return to work part-time from July without risk of losing out financially.

What extra funds will be available to self-employed workers?

Freelancers will be able to claim up to £6,570 in August as a second, and final, grant is offered to those who have lost income from the coronavirus lockdown.

Each self-employed worker can apply for the grant of 70% of their average monthly trading profits, up to a cap of £6,570. Including the first grant in May, the maximum amount self-employed workers can receive is £14,070 each.

Are there more details on part-time returns and can I take a job elsewhere?

The details on how many hours an employee can work remain unclear, but the Government said it is looking for maximum flexibility. 

From July 1, employers ‘will be able to agree any working arrangements with previously furloughed employees’, the Treasury said.

Mr Sunak has previously said furloughed workers can take jobs elsewhere while on the scheme, but anyone looking to bring workers back will need to ensure organisations are ‘Covid Secure’ under new guidelines drawn up by the Department for Business, Energy and Industrial Strategy.

Will the Government continue covering the cost?

The Government will fund the furlough scheme, which has supported seven million jobs at a cost of £14 billion a month, until the end of July.

From August, companies will have to pay employer national insurance and pensions contributions for those on furlough.

In September, bosses will also have to pay 10% of a furloughed employee’s wages, with the Government covering 70% up to £2,190 per worker, raising to 20% in October, with the Treasury picking up the remaining 60% up to £1,875.

The Government said this represents 14% of the gross employment costs for September and 23% in October.

Future claims from businesses for furlough money from July can only be made by employers using the scheme already.

Can we expect to see furlough extended beyond October?

No, officials were keen to stress there are other measures in place and support for businesses and individuals, but the scheme will end on Halloween.

How much will the furlough scheme cost the taxpayer?

The total bill for it is expected to be around £80 billion – £15 billion has been paid out so far – with the amounts falling as more parts of the economy reopen and staff can return to work.

Will this lead to mass redundancies?

Unions are warning once the support ends, companies will start sacking staff as the money dries up. 

Airlines have already started warning job losses are inevitable, and the Government has pointed out not every job can be saved.

But the independent Office for Budget Responsibility (OBR) has predicted unemployment to peak at 10% this summer, before falling back to 7.5% by the end of the year, based on a three-month lockdown scenario. Officials are expected to present revised figures next week.

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