Changes to the Furlough Scheme
From 1 July 2021, the amount the Government contributes towards unworked hours for workers under the Furlough Scheme has changed.
Between 1 November 2020 and 30 June 2021, the Government contributed 80% for unworked hours (up to a maximum of £2,500 per month).
From 1 July 2021, the Government’s contribution reduced from 80% to 70% and it will reduce again in August to 60%. Employers will need to top up the 10% and 20% respectively to ensure any workers who are furloughed receive at least 80% of their normal pay (or £2,500, whichever is lower). Subject to any contractual arrangement to the contrary, it is up to the employer to decide if they would like to cover the full difference between the amount contributed by the Government and the employee’s normal salary. This will remain the case until furlough ends on 30 September 2021.
It is hoped that, by reducing the contribution for unworked hours, employers will be encouraged to bring back furloughed workers (as it will become more of a financial burden for employers to keep them on furlough).
Health Secretary, Savjid Javid, confirmed in Parliament on Monday that vaccinations were being brought forward in the hope that restrictions would end on 19 July 2021. This would mean businesses that are currently not able to open could do so from this date. This, in turn, would mean that furloughed workers in those businesses may be able to return to the workplace or, if the business cannot afford to pay them, face being made redundant.
It is estimated that, in the time between the Coronavirus Job Retention Scheme (Scheme) being launched in March 2020 and its (proposed) end in September 2021, it will have cost £66 billion. On the other hand, it has undeniably kept the unemployment rate from increasing to unprecedented levels. In March 2020 it was estimated that more than 1 in 10 workers would be affected by the pandemic and lose their job. However, instead the unemployment rate is currently less than 1 in 20.
Whilst the Government has stated (not, it must be said, for the first time) that there will be no further extensions to the Scheme, Labour have called for it to last beyond the 30 September 2021 deadline as a result of the delayed reopening of the economy on 19 July. It is unlikely that the Government will agree to this but, as with past extensions to the Scheme, if it does subsequently agree, we predict that it will be announced at the very last minute.