Government Furlough Scheme Extended Until September 2021
The Coronavirus Job Retention Scheme (CJRS), or furlough as it is better known, was due to end on 30 April 2021. However, while delivering his Spring 2021 Budget speech, the Chancellor, Rishi Sunak, announced that the Government Furlough Scheme will be extended until 30th September 2021. Full details and government guidance of the updated scheme can be viewed here.
The key features of the furlough scheme extension announcement are:
- Employees on furlough will continue to receive 80% of their salary for hours not worked, up to a maximum of £2,500 per month, until the scheme ends on 30 September 2021. This is regardless of the Government’s contribution to their salary. Employers and Government contributions until the end of the scheme are as follows:
- Between now and 30 June 2021, the Government will pay 80% of an employee’s salary for hours not worked. During this time employers are only required to pay employers’ national insurance contributions and pension contributions;
- In July 2021, the Government’s contribution will decrease from 80% to 70% of an employee’s salary for hours not worked. With employers paying the remaining 10% of an employee’s reduced income on top of the employers’ national insurance contributions and pension contributions; and
- During August and September 2021 the Government’s contribution will decrease from 70% to 60% of an employee’s salary for hours not worked. With employers paying the remaining 20% of an employee’s reduced income on top of the employers’ national insurance contributions and pension contributions.
- To be eligible for the Job Retention Scheme, for claims made on or before 30 April 2021, employees need to have been on their employer’s payroll from 30 October 2020 at the latest
- For claims made on or after 1 May 2021, employees need to have been on their employer’s payroll from 2 March 2021 at the latest
- Employers can place employees on full furlough, in which the employee does not work any hours, or flexible furlough where the employee works a reduced amount of hours. There is no minimum or maximum amount of hours an employee can work on flexible furlough
- If an employee decides to take annual leave whilst on furlough, the employer must pay the employee up to their full salary for the duration of the annual leave and not the 80% reduced income
- Employers using the Coronavirus Job Retention Scheme must reach a written agreement with employees being placed on full or flexible furlough and keep records of all employees on furlough. Such records must be kept for at least five years
- HMRC will continue to publish the names of all employers accessing the CJRS in order to meet ‘transparency commitments’ and to ‘deter fraudulent claims’
For the latest data for claims made through the furlough scheme published by HMRC please click here.
What Do Our Employment Law Specialists Think?
The purpose of the furlough scheme was and continues to be to decrease the need for redundancies. Unfortunately for various reasons, including the decrease in consumer spending, there have been and will continue to be job losses. The current instability of the employment market is apparent with the store closures of large chains such as John Lewis, Debenhams, and Edinburgh Woollen Mill.
Hopefully, with the roll-out of the vaccine, the furlough scheme will not need to be extended beyond September 2021 and life and the economy can return to some form of normality. In the meantime, I urge employers to continue to make use of the furlough scheme rather than make redundancies, where they can.
Please note that despite the Coronavirus pandemic, employers considering redundancies must still ensure that they undertake a fair redundancy consultation process.
Having worked in employment law for over 10 years I have vast experience in extensive and complex employment law cases. So, if you need advice on the Coronavirus Job Retention Scheme or are considering the need for redundancies, then please contact me, via robert.zacal@GAsolicitors.com or call 01752 203500.
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