Millions could lose their jobs as furlough ends, says Martin Lewis

Millions could lose their jobs as furlough ends, says Martin Lewis

Money Saving Expert Martin Lewis has warned that millions of people could lose their jobs as the furlough scheme begins to wind down.

8.9million people across the UK have been placed on furlough – a scheme which sees the Government pay 80 per cent of their salary.

It has meant that businesses which have closed through the coronavirus lockdown have been able to keep staff on – rather than making them redundant.

But from the end of July the scheme will begin to wind down – and employers will have to start making at least a partial contribution to the cost of their staff.

If they want to avoid that, employers will need to begin making redundancies as soon as today – allowing for the proper consultation period.

In his weekly email newsletter, Martin Lewis said: “I’m sorry for the stark warning. From August employers need to start contributing towards furlough costs.

“This means redundancy is likely by then for those in roles employers don’t consider viable after October, when furlough ends. As redundancy can require a 45-day consultation period, that means many will soon get letters.

“I suspect this will impact 100,000s or even millions. We’ve updated our redundancy guide – with tips to prepare financially and details of your rights to pay, notice and holiday, as well as other legals. ”

Appearing on This Morning on Tuesday, Martin told Holly and Phil: “In June and July (the furlough scheme) will work exactly as it does now in terms of who pays for what.

“Then, from August, employers will have to start to contribute to furlough. In that first month, in August, they will just have to pay pension and national insurance contributions.

“Each month after that, employers have to contribute more and more to those people who are on furlough, and if you’re still on furlough by October, then the employer will pay pension and national insurance contributions, plus 20 per cent of the 80 per cent of the salary, so there will be a real cost.

“What that clearly means in that case is, from August, if you’re on furlough, it costs your employer.”

The Money Saving Expert then went on to sound the warning of redundancies: “The knock-on from that will be, if employers know that there’s someone who they don’t think their job is viable after October, will start to make people redundant from August, because that’s when it costs to keep people on furlough.

“We’re likely to see a real spike in redundancies coming over the next few weeks as people go into their consultation processes.”

After being asked by Holly and Phil, Martin cleared up some confusion about working on furlough: “From July 1, a month earlier than we originally thought, you’re going to be able to work part-time, for your employer, while on furlough.

“The amount of work you do, I think, is going to be varied by the week.

“So, one week you could work full-time, the next week you could work, half-your hours, the week after, no hours.

“As for what you get paid, while you’re working, you should get 100 per cent of your salary. While you’re not working, you should get your standard furlough pay which is 80 per cent of salary.”

The example Martin used showed someone who was earning £1,000 a month for 40 hours a week would get paid £250 a month, for working 10 hours a week, but the rest of the time they don’t work is accounted for by furlough at 80 per cent, which is £600 a month, resulting in an £850 earning, £50 more than if they didn’t work at all.

This Morning returns at 10am on ITV tomorrow.

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