From today (01/09/20) onwards employers will have to contribute to their furloughed worker’s salary as the Government will not be paying the usual 80 per cent of employees’ wages.
Back in May, Rishi Sunak, Chancellor of the Exchequer announced that employers will start having to pay towards the cost of the Coronovarius Job Retention Scheme (CJRS), from September companies must pay 10 per cent and then 20 per cent in October of the 80 per cent of wages the furlough scheme entitles to employees.
From last month (August), employers had to pay National Insurance Contributions (NICs) and pension contributions as well. However, this is the first month that employers will have to pay towards the salary that furlough provides for them.
Over the course of the scheme, 9.4 million workers have been furloughed. The scheme will close at the end of October with Mr Sunak more than once stating no extension will be made to the CJRS.
As the cost of using the furlough scheme has now increased, there is a fear that the number of redundancies made may now increase.
Craig Beaumont, chief of external affairs, at of the Federation of Small Businesses (FSB) told the BBC that one million small employers in the UK have used the furlough scheme. Just under a quarter (23 per cent) of small employers are considering reducing the size of their workforce in the next three months.
Mr Beaumont said:
This is very very serious. That’s a huge section of the economy,” he said.
Sixty per cent of those who work in the private sector do so for a small business, so if that happens without any intervention, then that’s a huge increase in mass unemployment.
This comes as Germany has outlined it has extended its furlough scheme until the end of 2021. Originally short-time work subsidies were due to come to an end in March 2021, now they will be running throughout the whole of next year. The German scheme is called Kurzarbeit.