Furlough scheme should be permanent with unemployed paid 80% of wages, says Resolution Foundation

THE furlough support scheme should be made permanent for unemployed workers, according to a new report.

The Resolution Foundation think tank, which focuses on the needs of middle and low income households, believes the earnings insurance should be continued beyond the pandemic.

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This isn't something that the Government is considering, but the research body is calling for the welfare system to be reformed and improved.

Its latest report argued that workers who have recently been made unemployed should be paid up to 80% of wages for three months while they look for a new job.

At a time when there are a lot of jobs about, the think tank estimates it would cost around £900million a year, based on 2019 unemployment levels.

This is compared to the £82billion spent in 2020 on emergency coronavirus support schemes, such as furlough, grants for self-employed workers and boosting Universal Credit payments by £20 a week.

Can I be made redundant if I’m on furlough?

EVEN though furlough is designed to keep workers employed, unfortunately it doesn’t protect you from being made redundant.

But it doesn't affect your redundancy pay rights if you are let go from your job amid the coronavirus crisis.

Your employer should still carry out a fair redundancy process.

You will be entitled to be consulted on the redundancy lay-off first and to receive a statutory redundancy payment, as long as you've been working somewhere for at least two years.

How much you're entitled to depends on your age and length of service, although this is capped at 20 years. You'll get:

  • Half a week’s pay for each full year you were under 22,
  • One week’s pay for each full year you were 22 or older, but under 41,
  • One and half week’s pay for each full year you were 41 or older.

Sadly, you won't be entitled to a payout if you've been working for your employer for fewer than two years.

There should be a period of collective consultation as well as time for individual ones if your employer wants to make 20 or more employees redundant within 90 days or each other.

You are also entitled to appeal the decision by claiming unfair dismissal within three months of being let go.

If you're made redundant after your company has gone into administration you can claim redundancy pay via Gov.uk.

It argued that reforming the system would mean those who lose their jobs in future are automatically protected.

This would save cash in the long run compared to if the government redesigned unemployment support every time crisis struck.

However, the report also acknowledged that in times when jobs were scarce and unemployment rises sharply, such as after the 2008 financial crash, it could end up costing the taxpayer a steep £3.25billion.

Workers on the furlough scheme received up to 80% of their wages, up to £2,500 a month, from the state.

The programmes enabled households to retain a standard level of income throughout 2020, despite millions of employees being unable to go to work.

It meant they could continue to pay pension and national insurance contributions, as well as remain employed.

But the think tank argues this was only made possible by radically reshaping the welfare state at short notice and at huge cost.

Mike Brewer, chief economist at the Resolution Foundation, said: "The big challenge now is whether the UK's post-pandemic welfare system should retain welcome new elements such as earnings insurance, and address key problems such as the low level of the basic safety net and sick pay.

"Simply returning to the old system is not good enough after what the country has gone through."

A Government spokesperson said: "Our extensive, emergency measures have supported people throughout this pandemic and in the face of unprecedented disruption to the jobs market.

"As restrictions are eased, we know that getting into well-paid work is the best way to boost household income which is why our multibillion-pound Plan for Jobs is already helping people re-join the workforce."

Employees can still be furloughed part-time if employers aren't able to offer them their full contracted hours.

It means they will be paid in full for the hours worked by their employer and receive up to 80% of pay from the Government for contracted hours not worked.

Sounds complicated? Here's our guide on how to calculate your wages if you're affected.

 

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