Effect of furlough on employer's Levy fund

[Martin LocockParticipant]

Will employers who put some of their staff on furlough reduce their wage bill by the 80% that is covered by the government grant? If so does that mean that their Levy contributions will drop? If so it is likely that their Levy may become over-committed.

[Frances HillParticipant]

Crikey, hadn’t thought of that. Following………

[Sue BishopParticipant]

That’s entirely possible, but if you check your co-investment report monthly, then you can invoice the co-investment contribution. Only potential problem here would be if you didn’t have a procured non-levy contract, what effect might that have?

Sue

[stevehParticipant]

OK, so, their wage bill is only going down if they’re paying people less money, it doesn’t, as far as I’m aware, matter that 80% of that is coming from the government. So, if they’ve reduced people’s wages to 80%, then there will be a reduction in how much is going into the levy pot (particularly if this reduces their overall payroll to less than £3M).

HOWEVER, anyone who STARTED as Levy funded REMAINS as levy funded, even where there is no (new) money in the pot, so we don’t need to worry about needing procured non-levy contracts for learners who are already on-programme (we just need to worry about getting the 5% off the employer!). This has been the case since May 17.

Might get a bit weird around new starts, not quite sure what the lag is on employers dropping out of Levy, particularly where, at this point in time, it’s not necessarily permanent…

[Martin LocockParticipant]

Thanks Steve- yes if the furlough pay is counted as payroll then it won’t have an enormous impact.