Two million people could be made redundant in September, says report

Two million people could be made redundant in the UK in September alone, according to a new report.

The move will come ahead of the Government’s furlough scheme ending in October.

Throughout the coronavirus pandemic employers have been able to furlough their staff – meaning they remain employed but the Government pays 80 per cent of their wage.

The amount the Government pays will begin to reduce this summer – and the scheme will end in October, reports The Mirror.

More than 9million people have been furloughed under the Government’s furlough scheme since April, a number significantly higher than the Bank of England’s initial forecast.

A new report, by lender MarketFinance Ltd, found 45 per cent of firms plan on bringing up to half of their staff back from furlough in July.

Another quarter of furloughed staff will be kept on furlough until the scheme ends.

The report reads: “The future remains less certain for the remaining quarter of furloughed staff, who could well be made redundant.”

That would equate to around two million people being made redundant as the scene ends.

Chancellor Rishi Sunak has unveiled plans to “wind down” the £64billion furlough scheme from late summer, to help get Brits back to work and the economy back on track.

This includes allowing staff to return to work part time – but on 80% pay from July 1, and asking all employers to make pension and national insurance contributions from August 1.

“It is important for businesses to understand how the new scheme will work,” employment expert Andrew Sanford explained.

“The scheme remains unchanged in July and is fully funded by HMRC. In August, businesses have to cover the Employers National Insurance and pension costs of the claim,” he added.

“This typically amounts to 5% of the claim but can vary as for low paid employees there may be no National Insurance or pension contributions to make. In September the employer will be additionally responsible for 1/8 of the furlough pay, increasing to 1/4 of the furlough pay in October.

“For an employee who is receiving £2,500 of furlough pay currently, if they were still on furlough in September, the employer would pay £312.50 plus the associated employer’s National Insurance and pension contribution and the government would pay £2,187.50.

“However there are some additional costs that may be incurred such as Health Insurance, Death in Service Benefit and Company Car if applicable. Any employer pensions payments over the basic 3% rate, any salary top up payments over and above the furlough entitlement, including the resultant NIC and pension payments, holiday pay and accrued holiday leave will have to be paid.”

Sandford explains that as these new changes come into force, employers will considering cuts to make up for the three month lockdown.

“Regrettably, with the additional costs of furloughing staff, and the inevitable restrictions likely to be in place post lockdown, businesses will have to consider whether it is economically viable to continue furloughing all of their staff and many may be made redundant.”

Any employer looking to make more than 100 employees redundant before August 1, when the first change takes effect, must give every worker 45 days’ notice under UK employment laws.

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