Furlough flexibility welcome but more support needed

Daniel Fowler
June 6, 2020

The Theatres Trust, a national advisory public body for theatres, today warned that these modifications to the scheme (whereby employers have to pay a small part of furloughed employee salary as well as National Insurance contributions and pensions) "will make redundancies throughout the sector inevitable" and may "close theatre businesses", with 70 per cent of United Kingdom venues already stating that they'll run out of money by the end of 2020.

Furloughed employees are now receiving 80% of their salaries, paid by the government, up to £2,500 a month.

There had been a lot of speculation that employers would be required to contribute immediately 20% or 25% of furlough pay from 1 August. Employers must pay wages for the hours their employees work and may still claim under the scheme for hours not worked. Employers are then responsible to pay wages in full whilst the employee is working.

If there is no work available for employees at the current time, they can remain on furlough as they have done.

In September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work - employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500.

The Government is picking up the wage bills of close to nine million furloughed workers, who are unable to do their jobs because of the coronavirus pandemic.

'Employees who believe they are not getting their 80% share can also report any concerns to the HMRC fraud hotline.

The final month of the scheme - unless another extension is rolled out - will see the government pay 60 per cent of wages, up to a cap of £1,875.

The government says this employer contribution represents 14 per cent of the gross employment cost of the employee.

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The Trust has called upon the Government to extend the scheme for those industries affected, to help safeguard both the sector and jobs. The scheme will end on October 31.

"Pubs have been closed since March with no income coming in", said BBPA chief executive, Emma McClarkin.

Following the announcement of the extension, Jane Tully, director of external affairs at the Money Advice Trust, the charity that runs National Debtline and Business Debtline, commented: "The Chancellor's extension of the Self-Employment Income Support Scheme will come as a relief to millions of self-employed people who are relying on these funds to get through the Covid-19 outbreak with their business and livelihood intact".

"The government still needs to recognise that these costs will be hard for hospitality businesses to bear, and consider other measures to support the sector".

The initial Treasury twitter feed suggested employers would not be able to furlough or re-furlough workers after 10 June.

Any new working hours agreed between a business and their employee must cover at least one week and be confirmed to the employee in writing, meaning new agreements will have to be drafted.

'The government needs to be wary of more workers being placed on furlough, which will increase the cost of the scheme.

'Although the employer contribution is to be phased in slower than expected, a lot of businesses will not be ready to take the hit of these extra costs.

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