Businesses will have to foot a larger portion of the bill for anyone put on leave under the coronavirus retention program starting August 1.
The government extended the scheme until September 30, 2021, but revealed that employers would have to shoulder an increasing share of the financial burden.
The good news is that the amount you take home each month shouldn’t change, although it might if your business voluntarily paid you extra.
Under the original scheme, the government paid 80% of wages up to a maximum of £ 2,500 per month.
But from July 1 the rules changed so that the government only pays 70% of wages up to a maximum of £ 2,187.50 – employers now have to make up the difference so everyone still gets 80 % of salary.
As of August 1, the government’s contribution will decrease again and the amount invested by businesses will increase.
The government will only pay 60% of the wages of workers on leave up to a maximum cap of £ 1,875.
Again, your business will need to pay the remaining 20% so that you still receive 80% of your total salary.
One thing to note is that you might miss it if your business voluntarily paid extra.
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Some companies have chosen to top up government payments so that employees receive 100% of the salary while on leave.
Now that businesses have to foot more of the bill themselves, they may not be able to afford the additional payments.
There is also a risk that some companies are more likely to go bankrupt, which could increase the likelihood of insolvencies and layoffs.
But generally, the extended scheme means that businesses struggling due to the effects of the pandemic can continue to put you on leave and recoup some of the costs from the government.
Who can be put on leave?
Your employer can only put you on leave if you worked for them and paid by March 2, 2021.
You can be on full leave, where you don’t work at all, or on flexible leave where you still work a few hours, days or weeks.
Any type of employee can be affiliated with the program, including contractors and part-time workers.
You cannot choose to opt out yourself. You can ask your employer if you want to be put on leave – for example if you are clinically extremely vulnerable – but they don’t have to say yes.
Can I be made redundant if I am on leave?
EVEN though the leave is designed to keep workers employed, it unfortunately doesn’t protect you from being made redundant.
Your employer should always conduct a fair dismissal process.
You will have the right to be consulted in the first instance about the dismissal and to receive statutory severance pay, provided you have been working somewhere for at least two years.
The amount to which you are entitled depends on your age and your seniority, although it is capped at 20 years. You will have:
- Half a week’s salary for each full year you were under 22,
- One week’s salary for each full year you were 22 or over, but under 41,
- One and a half weeks of salary for each full year you were 41 or older.
Unfortunately, you will not be eligible for payment if you have worked for your employer for less than two years.
There should be a collective consultation period as well as time for one-on-one consultations if your employer wants to lay off 20 or more employees within 90 days or between them.
You also have the right to appeal the decision claiming unfair dismissal within three months of your dismissal.
If you are made redundant after taking over your business, you can apply for severance pay through Gov.uk.
How do I apply for vacation pay?
Your employer must claim your vacation pay through HMRC.
They will provide details of your salary so that the tax authorities can calculate what is owed to the company.
Your pay should be in your salary package as usual, and you shouldn’t have to do anything.
It’s worth checking to make sure your pay is correct, especially if you’re on flexible leave and working a few hours as usual.
During your off hours, your boss cannot ask you to do paid work.
When will the leave end?
The leave was originally scheduled to end on October 31, 2020, but the Chancellor extended it until December 2 after England were placed in a four-week nationwide lockdown.
Later, on November 5, he changed his mind again and said it would continue until the end of March 2021.
It was then extended again in mid-December for one month until the end of April 2021, before an extension until September was announced in the March 2021 budget.
No further changes are expected in the way the plan is funded after August 1.
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