On the 12th August the UK government announced that the UK had fallen into recession. The Coronavirus has not only caused countless deaths, but untold damage to the economy.
The furlough scheme has allowed businesses which are struggling to keep employees on their payroll, but delegate the payment of wages to the state. Furlough or job retention scheme, means employees are paid up to 80% of their income to a maximum of £2500,00, this has now dropped to 70% and the employer is paying 10% towards the salary of each employee. In October the government will drop it’s payment contribution to 60% and the employer will have to start paying 20%.
When an employee is on furlough they cannot work for their employer. The scheme began on the 20th April and on the 5th May the government announced that one in four UK workers had been furloughed.
The Question Is Now What Will Happen When It Ends?
When the scheme was first announced on the 20th March it was only to be available to business until 31st May, however on the 12th May the chancellor announced it would be extended until the 31st October, though it would start winding down from the start of August.
For the millions of people on furlough it is concerning to think about what will happen when it ends. The plan was always that the employee would return to work, the crisis would be over and their existing position would still exist. Many businesses however are no longer in a strong position and this may no longer be the case.
Companies will have 4 choices, bring back employees full time, agree reduced working hours, furlough employees longer (at their expense) or redundancies. The employer will have to put any decisions in writing and employees made redundant will be entitled to their full redundancy pay. It is important for employers to keep talking to their employees to ensure they are full aware of what is happening.
With furlough ending and many people facing redundancy, it is important to know what help is available, what benefits you may be entitled too, making sure you can pay your essential bills and if you are struggling with debt what options are they suitable for?
Debt solutions do vary depending on where in the UK you live, your circumstances have to be considered also, are you in employment? Do you have any assets? What is the level of your debt? It also good to do an income and expenditure to see what affordability you have to pay towards your debt. Once a debt advisor has gained all the relative information they will discuss your options going forward, it is important that you are aware of the pros and cons of each debt solution.
It is important you talk to someone so you are aware of all the different debt solutions that are available.