Changes to the Furlough Scheme from 1 July 2021

Lauren Wilson
Lauren Wilson
Solicitor
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As we reported previously, the Coronavirus Job Retention Scheme (the “furlough scheme”) is currently envisaged to end on 30 September 2021 and there are changes as to how the furlough scheme will operate in July, August and September 2021.

Currently, the government covers the full 80% of employee earnings (not including employer National Insurance and pension contributions) which furloughed employees are entitled to under the furlough scheme, subject to a cap of £2,500 per month.

From 1 July onwards, in addition to the employer National Insurance and pension contributions which employers are already required to cover, employers will also be required to make a 10% contribution in respect of furloughed hours in July, with the government’s contribution capped at £2,187.50 and the employer’s contribution capped at £312.50. This will then increase on 1 August to the employer having to make a 20% contribution for the months of August and September 2021, with the government’s contribution for those months being capped at £1,875 and the employer’s contribution capped at £625.

These increased contributions will apply to the unworked hours of any employee on ordinary furlough leave or on flexible furlough leave.

For the avoidance of doubt, the percentage of earnings which employees will require to receive from 1 July until 30 September must remain the same as it has been to date, namely 80% and subject to a cap of £2,500. It is the ability of employers to recover the furlough pay from the government which is reducing on the sliding scale in the months to come.

As always, employers are able to ‘top up’ furlough pay in excess of the above minimum rates at their discretion.

Whilst none are envisaged at present, should there be any further extensions or changes to the furlough scheme, we will update clients accordingly.

If you have any questions on the furlough scheme, or if you require support or advice on any other employment law matters, please do not hesitate to contact our team on 0141 331 5150.

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