What do the new furlough changes mean for you

Just as everyone was getting to grips with the Coronavirus Job Retention Scheme (“Furlough”), another update is due to come into play from 1 July 2021.

Background

Currently, any workers who have been placed on Furlough receive at least 80% of their salary which has been subsided by the Government. Employers have the option to top this up to 100% by paying the worker the remaining 20%, however this level of contribution is set to change.

Since the introduction of Furlough, over 11 million workers have been able to take advantage of the scheme which has resulted in a decrease in the amount of potential redundancies that would have had to have been made.

What is changing?

From 1 July 2021, the Government’s contribution to the Furlough scheme will be decreasing from 80% to 70%, (up to a maximum of £2,187.50) for the hours not worked. However, the Government is not removing the 80% rule, which means that employers will be required to top up the remaining 10% (up to a maximum of £312.50) so that each furloughed worker still receives at least 80% of their salary.

The Government’s contribution will further decrease to 60% (up to a maximum of £1,875) in August 2021, so employers will be required to top up furloughed worker’s salaries by 20% (up to a maximum of £625). This reduction is due to continue throughout September 2021 when the scheme comes to an end.

There is no restriction on employers topping up their workers’ salaries to the full 100%, but as a bare minimum, each furloughed worker must still receive at least 80% (up to a maximum of £2,500 per month).

What do employers need to do?

Continue to ensure that all furloughed workers are paid at least 80% of their salary! If this is not the case, and employers do not top up their workers’ salaries to at least this amount, subject to the maximum cap of £2,500, then they will no longer be eligible for the scheme.

Employers can of course opt to top with their employees’ wages above the 80% and/or £2,500 cap but this will be at their own expense.

If you are an employer or employee and would like to discuss any part of the scheme, please get in touch with a member of the Employment team on 01752 292201.