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Insights // 03 March 2021

Furlough Scheme Extended in Budget Announcement

Partner Sue Dowling, head of our Employment Law team, discusses the extension and winding down of the “Furlough Scheme”, changes to the level of Government support available and how we can help affected employers and employees.

In the budget, on 3 March 2021, Chancellor Rishi Sunak announced that the Coronavirus Job Retention Scheme, better known as the “Furlough Scheme”, will be extended once again, until 30 September 2021. It had been set to end on 30 April 2021.

Following what is the fourth extension, the Scheme will have run for a total of 18 months, if indeed it does finally end in six months’ time.

The move will undoubtedly come as a welcome boost to employers, particularly those in sectors such as hospitality, where businesses will not be able to fully reopen until at least 21 June under the Government’s outlined “road map”. However, the continued uncertainty and further extension of the Scheme will unfortunately come too late to protect some jobs, with many difficult decisions already having been made.

Which employees can be placed on furlough leave?

As neither the employer nor the employee needs to have previously utilised the Furlough Scheme, employees who have not previously been furloughed can be put on furlough for the first time, on a part-time or full-time basis and with their consent, provided that the member of staff was on the employer’s PAYE payroll on 30 October 2020 for claims made for the period up to 30 April 2021. For the period starting on or after 1 May 2021 employees must have been on the employer’s PAYE payroll as at 2 March 2021.

Employers will need to report and claim for a minimum period of seven consecutive calendar days. It is crucial to remember that to place an employee on furlough leave, the employer should ensure that it has the employee’s written consent to go on leave and for any salary reduction that will apply as a consequence (i.e. typically only 80% of their normal salary to a maximum of £2,500).

The support available for employers and employees

For the remainder of the Furlough Scheme, the Government has reintroduced a similar tapering of the level of support available to that seen in the second half of last year, as part of the original planned winding down of the Scheme.

Until 30 June 2021, the Government will continue to pay 80% of a worker's current salary for hours not worked, up to a maximum of £2,500 (gross). Employers will only be required to cover National Insurance (NI) and employer pension contributions. As before, employers can decide to top up an employee’s wages. In July, employers will be expected to contribute 10% of an employee’s wages, rising to 20% in August and September, in addition to NI and pension contributions.

 

Month

Government’s contribution to wages

Employer’s contribution to wages (excluding NIC and pension contributions)

Employer to meet  NIC and pension contributions

Part-time return to work an option under the Scheme

March –June 2021

80%

0% with the option to top up to 100%

Yes

Yes

July 2021

70%

10% with the option to top up to 100%

Yes

Yes

August - September 2021

60%

20% with the option to top up to 100%

Yes

Yes

Will we see further changes?

It is arguably less likely that the Scheme will be extended again than in has been at any other point in the past year, but it remains a possibility.

How we can help

Specialist advice relating to the Furlough Scheme, for both employees and employers, is available from our Employment Law team. We can also advise on areas including workforce restructuring and redundancies, unfair dismissal claims and any other aspect of employment.

You may also find out recent blog articles, 'What is a Settlement Agreement and What Should It Contain?' and 'Collective Consultation - Multiple Redundancy Situations Explained'.

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.

This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice. "Rishi Sunak MP - hi-res" by Ministry of Housing, Communities and Local Govt is licensed with CC BY-ND 2.0. To view a copy of this license, click here.


Sue Dowling

Sue Dowling

Partner, Employment Law & Venue Licensing

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