Changes to the Furlough Scheme
The Chancellor has announced that the Coronavirus Job Retention Scheme (CJRS) will be extended until 30 September 2021.
Eligible employees for the furlough scheme will continue to receive up to 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. ‘Flexible furlough’ will continue to be permitted, in addition to full-time furlough, meaning that businesses have flexibility to use the scheme for employees for any amount of time and any work pattern, while still being able to claim for the hours not worked.
Employers will not need to contribute to wages for hours not worked until 30 June 2021. They will however need to cover National Insurance (NI) and pension contributions for these hours.
From 1 July 2021, employers will be required to make more of a contribution to the CJRS as part of a ‘tapered’ furlough scheme, similar to that introduced in September 2020.
For July 2021, the Government will cover 70% of wages up to a cap of (£2,187.50) per month. Employers will have to pay the additional 10% of wages for hours not worked to make up a total of 80%, in addition to employer NI and pension contributions. For flexible furlough, the government grant will be prorated to reflect the proportion of hours the employee is on furlough compared to their usual hours.
For August and September 2021, the Government will cover 60% of wages up to a cap of (£1,875) per month. Employers will have to pay the additional 20% of wages to make up a total of 80%, in addition to employer NICs and pension contributions. Once again, for employees on flexible furlough, the government grant will be prorated to reflect the proportion of hours the employee is on furlough compared to their usual hours.
The extension of the CJRS beyond 21 June 2021, which is the anticipated date that the Covid-19 restrictions are due to be lifted, will be welcome news for many employers, as it will provide flexibility and support to businesses as the economy starts to recover.
This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.