Changes to government furlough scheme: advice for IOE and IT members

Fri 29 May 2020
Posted by: Noelle McElhatton
Trade News

Rishi Sunak

Chancellor Rishi Sunak is expected to announce the winding down of the government's furlough scheme today. Photo: courtesy of HM Treasury 

The Chancellor Rishi Sunak is expected to announce later today a tapering of the government’s furlough scheme by asking firms to contribute 20% of furloughed staff member wages.

The original scheme, launched in March, involved the government taking on the entire financial burden of helping firms disrupted by Covid-19 keep staff on their books while on leave.

Earlier this month, the Chancellor said the programme, known as the Coronavirus Job Retention Scheme, would be extended beyond June until October. It allows furloughed staff to be paid 80% of their salaries up to £2,500 a month.

Employer contribution

From 1 August however, firms availing of the scheme will have to pay 20% of staff wages, their National Insurance employer contributions and pension contributions.

The Financial Times says that 8.4 million people employed by firms are currently being paid by the state, with another 2 million supported through a scheme for the self-employed.

At this afternoon’s Downing Street briefing, the Chancellor is also expected to reveal a new cut off point for joining the scheme.

IOE&IT member advice

Business members of the Institute of Export & International Trade can get immediate advice on these changes through a new helpdesk providing HR and tax advice via telephone and a business document library.

Kelly Rawles, head of membership services at the IOE&IT, said:

“At this time of uncertainty, our new IOE&IT Business Shield helpdesk is providing business members with guidance on furlough and any changes to the scheme. This is through a telephone helpline and a document library, which is continuously updated to take in the latest government announcements.

“We are delighted to provide members with this service when employment conditions are changing so rapidly.”

The library contains guides for managers on joining or withdrawing a staffer from the furlough scheme and template letters to furlough staff (while the scheme remains open) or withdraw them from furlough.

Free to business members

The helpdesk is available free to business members and to individual members who upgrade.

Regardless of today’s announcement, furloughed staff can still undertake training during the coronavirus pandemic – as long as their employer’s core business is not training.