What happens when furlough ends?
As of the end of September 2021, the UK government has officially ended its furlough scheme, which is expected to have an impact on thousands of businesses and employees across the country.
At the end of September 2021, it is thought that around a million UK workers were still on furlough. So what happens when furlough ends for these people?
Many of these were in the foreign travel, tourism and hospitality industries. Some of these workers are expected to lose their jobs as a result of the end of the furlough scheme and others may find that their hours are reduced, or their salaries are limited to enable their employers to keep them on.
As a consumer lender specialising in short-term loans for people who need access to emergency cash, we are here to support our customers, while maintaining the highest possible responsible lending standards.
The end of the furlough scheme will leave a large number of people very vulnerable, financially, and it’s vital that lenders do not take advantage of the situation and encourage or allow borrowing among those who cannot afford to repay.
What was furlough and when does furlough end?
The UK government started the furlough scheme at the beginning of the pandemic when it became clear that millions of people would not be able to go to work as normal as a direct result of the Covid-19. It came to an end on 30 September 2021.
Employers were initially told they could keep these employees on their books and the government would pay them 80% of their wages to a cap of £2,500/month, while they stayed at home. This was later reduced to 60% with employers asked to top up the additional 20% to 80%.
According to figures from HM Revenue & Customs, Some 11.8 million jobs have been covered by the scheme between 20 March 2020 and the end of September 2021. However, the number of employers claiming furlough funding for their employees has reduced steadily over the months since the peak in May 2020.
The total cost of this job retention scheme has hit almost £70bn and is part of the reason the government has had to borrow huge sums every month since the start of the pandemic. It’s no surprise, then, that this had to come to an end at some point, and with the economy getting back on track and mass vaccination helping to get the pandemic under some kind of control, the government decided that the end of September 2021 was the right time to call it a day. But with a million employees still on furlough, was it too early?
What support is available to employees after furlough ends?
Some people who were covered by the furlough scheme up until the end of September will now find themselves out of a job. Others will be told they are still employed, but cannot work because their employers have little or no work for them due to the ongoing pandemic.
This is likely to apply to those employed by airlines or airports, for example, or those whose jobs are in some other way tied up with foreign tourism, which is still very limited. The people who will suddenly be finding themselves in this situation, perhaps on zero-hours contracts, for example, do have options. They may be entitled to Universal Credit or New Job Seeker’s Allowance (or both), providing they have been paying National Insurance in recent years and fulfil a few other criteria.
People who are employed, but who work less than 16-hours a week, might also be entitled to the above financial support following the end of their furlough payouts.
For those who are made redundant as a result of the furlough scheme ending, there are specific redundancy rules that come into play. You can read more about this on the Chartered Institute of Personnel and Development (CIPD) website.
Employment tribunal cases are emerging where staff members who have previously been furloughed are then made redundant. Some people feel that they were made redundant purely because they were on furlough. If, for example, you were furloughed because of your childcare or caring responsibilities, and were subsequently made redundant over a staff member who was able to continue working in the pandemic, you may have a case for unfair dismissal.
Also, it’s worth bearing in mind that, even if you were on 80% of your wages during your furlough period, if you are made redundant, you should be paid 100% of your salary during your notice period. Additionally, furlough funds should not have been used to cover this following December 2020.
If you are out of a job, following the end of the furlough scheme, you should be able to claim New JobSeekers Allowance and may also be eligible for a range of other benefits, including Universal Credit.
Are short-term loans an option if you’re struggling financially after furlough?
Short-term loans and payday loans, such as those we offer here at Moneyboat, are not a solution to long-term financial problems. We take steps to make sure that each and every one of our borrowers has a steady income from employment and that they can reliably afford to repay their loan over its entire course. Anyone offering loans to unemployed people, people on furlough or anyone repeatedly using debts to pay off other loans, are not lending responsibly.
On the other hand, if you retain your job after the end of the furlough scheme and still have a steady income, but need cash in an emergency once in a while, a short-term loan could be helpful. Short-term online loans, repayable over a number of monthly instalments, can help those who may not fulfil the criteria for a bank loan, for example. If you’re struggling to get a credit card for a necessary one-off purchase, you may be able to cover the cost with a short-term online loan, even if you have a less-than-perfect credit rating.
We’re here for our customers after furlough
Here at Moneyboat, we are always here for borrowers who need access to fast cash in an emergency. However, we will also always put responsible lending at the forefront of everything we do.
From the very beginning of the Covid-19 pandemic we adapted our advanced loan management system to ensure we never contributed to the financial problems people were experiencing as a result of the crisis.
Taking on debt when you are in a financially vulnerable position, like on furlough, or after being made redundant, is rarely a good idea and can lead to serious, long-lasting credit problems. Looking forward, we will continue to help those who meet our criteria to access convenient emergency finance as quickly as possible.
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