Furlough rules were updated recently and since July 1, the Government reduced its contributions of 80 percent of salaries to 70 percent. Workers themselves did not see a difference to their payouts but employers are now required to contribute more to the costs.
Anne Marie Morris, the Conservative MP for Newton Abbot, recently asked the following question in the Commons: “To ask the Chancellor of the Exchequer, what steps his department is taking to support businesses with employees who may be reluctant to come off of furlough arrangements and return to the workplace as COVID-19 restrictions are eased.”
This question was answered today by Jesse Norman, the Financial Secretary for HM Treasury.
Mr Norman said: “As clearly stated in the CJRS guidance, employees will need to be able to work for the employer that has placed them on furlough if their employer decides to stop furloughing them or start flexibly furloughing them.
“If the employer decides to take an employee off furlough and has followed the correct contractual procedures and it is reasonable to expect the employee to return, then the employee may be in breach of contract and subject to disciplinary action if they refuse to work.”
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Furlough statistics were recently released by the Government which showed the number of workers being furloughed dropped dramatically in the lead up to May.
The data was examined by Hargreaves Lansdown who highlighted the following:
- The numbers on furlough fell 1.2 million in a month – to 2.4 million by the end of May.
- 30 percent of businesses had staff on furlough, down from 35 percent a month earlier.
- The age groups with the largest numbers on furlough are still 25-34 and 35-44.
- However, the highest take up rate among men is among those aged 65 and over. The highest for women is the under 18s, followed by those aged 65 and over.
- Younger people have returned to work faster. Between the end of April and the end of May, the number of under 18s on furlough fell 68 percent, those aged 18-24 fell 45 percent and those aged 25-34 were down 33 percent. By contrast those aged 55-64 dropped 25 percent and those aged 65 or over fell 16 percent.
- Men overtook women on furlough, partly because so many hospitality jobs returned, which are dominated by women (1.13 million women remained furloughed and 1.2 million men).
- £65.3billion has been claimed through the scheme.
Sarah Coles, a personal finance analyst at Hargreaves Lansdown, commented on these figures.
Ms Coles said: “Furlough figures plunged in May to 2.4 million – the lowest they’ve been since Halloween last year.
“It bodes well for the tapering of furlough today, which means furloughed staff will start costing employers significantly more to keep on the books. However, 2.4 million people remain vulnerable, and older people, travel workers and men look increasingly at risk.
“The fall in the furlough figures has been faster than the Bank of England forecast. At the end of March there were 4.3 million people on furlough, at the end of April there were 3.5 million, and at the end of May there were 2.4 million.
“However, some groups remain vulnerable. Older people are returning to work far slower than younger people. Furlough numbers for the under 25s dropped like a stone as hospitality businesses reopened, but the older you were, the less likely you were to return to work, and furlough numbers for those aged 65 and over fell just 16 percent.”
Ms Coles concluded by examining what options may be available for affected workers down the line: “Men are slower to come off furlough too, and men have overtaken women using the scheme for the first time since the very earliest days of furlough. This owes much to the fact that so many have returned to hospitality businesses, and far more women work in these roles than men.
“In some industries, furlough is still widespread, most notably airlines at 57 percent, hotels at 57 percent and tour operators and travel agents at 51 percent, and in these industries the numbers on furlough dropped far more slowly than elsewhere.
“For those still stuck on furlough, there’s the risk their employers will be seriously reconsidering whether they can afford to keep them on now they are shouldering 10 percent of their wages – alongside pension and NI contributions. These questions will become even more pressing when the scheme tapers again in August.
“There remains the hope that the economy will reopen and recover enough to protect your job before support falls away entirely. Certainly, noises from the Government indicate this is a key priority, which could help tip the balance for employers.
“If you’ve lost work, or are worried you might, there’s also positive news from job vacancy figures in the three months to May, when they reached pre-pandemic levels. And while accommodation and food services saw the most dramatic leap in the number of vacancies, they grew in 17 out of 18 sectors. It offers hope that if your job doesn’t come through this in one piece, there may be something else out there for you.”