How is the government’s furlough scheme changing on 1 July?

While the furlough scheme is continuing until the end of October, the eligibility of the scheme is changing for some workers

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Amid the coronavirus pandemic and subsequent lockdown, numerous people have had to adapt to new ways of working, such as working from home or having to practise social distancing when interacting with customers.

However, others who were unable to work were placed on the government’s furlough scheme, which enabled employers to keep their workers on the payroll while the government foots 80 per cent of their wages.

The coronavirus job retention scheme, which is capped at £2,500 per month per employee, was originally supposed to draw to a close in May, before being extended to October this year.

While the scheme is continuing for the next few months, there will be some changes starting from 1 July. Here’s everything you need to know.

What update is happening to the furlough scheme from 1 July?

When chancellor Rishi Sunak first announced the furlough scheme in March, it was initially made available to businesses up until 31 May.

This was later extended to an end date in autumn, although the percentage of employees’ wages paid by the government will decrease from September.

While this means that there are still several months until the furlough scheme draws to a close, changes to the programme are taking place at present.

The government previously outlined that from 1 July, only employees for whom employers have “successfully claimed a previous grant” through the coronavirus job retention scheme will be eligible for further grants.

These employees would have had to have been furloughed for at least three consecutive weeks in the period between 1 March and 30 June.

What does this mean?

In accordance with this guideline, employers will no longer be able to add new entrants to the furlough scheme.

As the workers in question would have had to have been furloughed for a three-week period up until 30 June, the most recent date on which they could have started furlough for the first time would be 10 June.

“This may differ if you have an employee returning from statutory parental leave,” the government added.

Furthermore, “the first time you will be able to make claims for days in July will be 1 July”, the government said.

“31 July is the last day that you can submit claims for periods ending on or before 30 June.”

Will I be affected?

If you have already been on furlough for at least three consecutive weeks prior to 30 June, your employer can apply for further grants for you through the coronavirus job retention scheme.

However, if you’ve been furloughed for less than three consecutive weeks before this date, your employer must decide whether you can return to work or not from 1 July.

When does the furlough scheme come to an end?

The furlough scheme will officially come to an end on 31 October.

Before that, changes to the coronavirus job retention scheme will continue to occur, as explained by the government in a detailed plan.

Throughout July, the government will pay 80 per cent of furloughed employees’ wages “up to a cap of £2,500 for the hours the employee is on furlough”, in addition to employer National Insurance Contributions and pension contributions for the hours they are on furlough.

The government will continue to pay 80 per cent of furloughed workers’ wages throughout August.

This will be reduced to 70 per cent in September, with a cap of £2,187.50 for the hours workers are on furlough.

Then in October, this will be reduced again to 60 per cent with a cap of £1,875.

“Employers will continue to be able to choose to top up employee wages above the 80 per cent total and £2,500 cap for the hours not worked at their own expense if they wish. Employers will have to pay their employees for the hours worked,” the government stated.

A recent survey suggested that a quarter of furloughed workers could be made redundant come September.