Changes to the Furlough Scheme

The Coronavirus Furlough Scheme:

The Furlough scheme, is a short-term temporary response initiative implemented by the government in March 2020. This was introduced as many businesses were unable to provide Covid secure working environments or work from home options. With this, employers are able to access financial support to help pay their employees wages whom are unable to work. Employers have to pay the wages initially and then claim this back through the scheme. This keeps employees on the company payroll ready for their return. For example, the hospitality industry shut earlier in the year due to lockdown restrictions and many were unable to work. This allows those within the industry to still receive a regular income and keep their employment status. The scheme has a new end date which is now September 30th 2021.

The Changes to the Furlough Scheme:

From July 2021, the governments contribution to the furlough scheme is changing from 80% to 70%. This means that employers will need to contribute the additional 10% to ensure their employees still receive 80% of their wages and to qualify for the 70% contribution from the government. The £2,500 cap will remain, although, employers are still welcome to top up their employees wages above the 80% and £2,500 cap. Businesses will still need to pay towards the employees’ national insurance contributions and adhere to the original furlough scheme rules. This means that employers are still unable to ask employees to do work within their recorded furloughed hours that makes money for their company or any linked or associated companies. Employees are still able to take part in training, volunteer or work for another employer. 

The deadline for claiming the wages of employees on furlough for the month of June 2021 is July 14th 2021.

Moving Forward:  

As mentioned, the changes begin this July and will progress each month. This means that in August the percentage the government will contribute towards employees’ wages will decrease further. The government plan to end the remaining COVID19 restrictions this month and hope that employees on furlough will then return to work. The extension of the scheme is to give employers the security they need incase situations change and businesses have to remain closed or restricted. By changing the amount they will contribute to the scheme, the government are hoping to encourage businesses to start bringing their employees back full-time. 

The specific contributions from the government for the month of August and September will be 60%. This means employers will need to contribute the additional 20%, as well as the national insurance and pension contributions. It has been a difficult time for many businesses and employees alike over the past year. Some businesses are opening back up for the first time since last March. Now more so than ever, it is important that we support these businesses as they open back up.

How do you feel about the furlough scheme? Have you found it beneficial and crucial for your business over the course of the pandemic? We want to know how you feel about the scheme and your opinions on the governments most recent changes, leave a comment below and let us know.

For information and guidance on the COVID19 pandemic please check the Government or NHS website.  

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