Introduced to protect millions of jobs during the Coronavirus pandemic, the furlough scheme was first launched in March 2020. Since then it has supported 11.6 million jobs, will cost approximately £666bn and has helped keep the employment rate to less than one in 20. But as the country gradually opens up, the furlough scheme is changing again.
We take a look at some of the key things you need to be aware of including the end date for the furlough scheme.
How is furlough changing?
As of 1st July 2021, employers will be expected to contribute to the cost of keeping their staff on furlough. The contribution from the Government will be reduced from 80% to 70% in July and then to 60% in August and September. As employees must receive 80% of their pay while they are furloughed, this means employers will need to pay 10% of their wages in July and then 20% in August and September.
The monthly limit of £2,500 will stay in place so employees won’t notice any difference.
Employers will also need to continue to pay employer National Insurance contributions and pension contributions. They can also choose to top up their employees’ salary above the 80% total at their own expense.
| July | August | September | |
| Government contribution: wages for hours not worked | 70% up to £2,187.50 | 60% up to £1,875 | 60% up to £1,875 |
| Employer contribution: employer National Insurance contributions and pension contributions | Yes | Yes | Yes |
| Employer contribution wages for hours not worked | 10% up to £312.50 | 20% up to £625 | 20% up to £625 |
| For hours not worked employee receives | 80% up to £2,500 per month | 80% up to £2,500 per month | 80% up to £2,500 per month |
When does the furlough scheme end?
The scheme is officially due to end on 30th September 2021. Since coronavirus restrictions are ending on 19th July, the government is hoping that by then most businesses will be fully reopened, enabling people who have been furloughed to return to work.
Employers will have a choice to either take back furloughed workers or to make them redundant. And while nobody wants to be made redundant, on a positive note, being furloughed doesn’t affect your right to redundancy payments.
Is there a chance it will be extended again?
This is tricky to answer given it’s already been extended four times! And with COVID cases going up again, the next few weeks will be crucial in seeing what impact this has on business and the economy.
Having said that, the reason furlough was originally extended to the end of September was to give businesses the chance to bring back their employees gradually and to get back on their feet as the economy reopens. This seems to have worked as approximately 2.4 million people are on furlough, which is down from the peak of 5.1m in January 2021; however the end of the furlough scheme is still likely to be a struggle for some businesses.
Need further advice?
If you’re still not sure about how the changes to furlough will impact your business, please get in touch.
We’re more than happy to provide advice and guidance on how to navigate the current situation and help you do the best thing for your business.
