Herefordshire and Worcestershire businesses will "struggle" as furlough scheme changes
From today employers will have to contribute 10% to staff's wages
Businesses in Herefordshire and Worcestershire could "struggle" when changes to the furlough scheme come into force.
From today (July 1) employers will be asked to contribute 10% of furlough pay to employees who are still on the scheme.
That will increase to 20% on August 1 before the scheme finally winds down at the end of September.
It's feared this could spell disaster for many businesses still struggling since the end of lockdown restrictions were postponed to July 19.
As of June 3, there were 962, 600 people still on the furlough scheme.
Robert Elliot, Director of Business Engagement & Development at Herefordshire and Worcestershire Chamber of Commerce, said: "Before I joined the Chamber of Commerce I had been in the hospitality industry for 35 years.
"Unfortunately for me furlough became redundancy so I have experienced first hand how it can affect different businesses.
"It's those sectors that had some form of closure during lockdown which are the ones which are probably going to be affected the most".
When an employer contribution was introduced in September 2020 there was a large fall in the number of people furloughed and an increase in redundancies.
However, taking people off furlough and making them redundant is not necessarily the best option for employers.
Redundancies bring with it their own financial burden as neither redundancy payments nor notice periods are covered by the furlough scheme.
Robert Elliot continued: "Businesses who can't operate at full capacity are going to struggle.
"By not being at full capacity will have a big impact on not only their supply chain but also raw materials too.
"This in turn will also have an effect on how they're able to emerge from that and the effect that will have on their employment and the number of staff they can hire."