21 June 2021 #Employment
As of 1 July, the furlough scheme which at its peak in May 2020 supported 8.9 million employments, will be winding down.
Some questioned whether there would be an extension to the scheme, following the Government’s recent decision to delay the lifting of Covid-19 restrictions from 21st June 2021 to 19th July 2021, but this does not seem to be the case. In fact, the Chancellor is said to have rejected calls from business to extend the scheme past its existing end date in September 2021.
Currently, for those companies furloughing staff, 80% of an employee’s wage (up to a maximum threshold of £2,500 per month) is covered by the Government’s furlough scheme in relation to hours not worked. No contributions need currently be made by the employer, although they can top up employees’ pay if they wish.
As of the 1st of July, the furlough scheme will start to taper down. Employers will need to contribute 10% of the employee’s wages for hours not worked, whilst the Government contribution drops to 70% (capped at £2,187.50 per month).
The employer contribution will rise further as of 1st August to 20% of an employee’s salary for hours not worked. The Government contribution will correspondingly drop to 60% (capped at £1,875.00 per month). This 20%/60% split will continue until the scheme comes to a complete end on 30th September 2021.
Employers need to remember that they must still pay National Insurance Contributions and pension contributions when using the scheme.
Employers in the leisure, retail and hospitality industries have been offered 100% relief on business rates since March 2020. However, this will also change on the 1st July, with the relief being cut to 66% instead, although remaining in place for longer than the furlough scheme, until March 2022.
If you have any questions in relation to furlough, redundancy or restructuring, please contact our employment lawyers for advice.