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Furlough: What’s changing this week?

The Government announced the extension of the Coronavirus Job Retention Scheme in March 2021, confirming that the scheme would be extended until 30 September 2021. However, the level of grant available to employers changes from 1 July 2021.

Up until 30 June 2021, the Government will contribute 80% of wages for hours not worked up to a cap of £2,500.00.

What’s changing?

From 1 July 2021, Government contributions to wages for hours not worked by employees are being reduced. The table below sets out the changes to Government contributions under the scheme across the next three months:

 

Month

Government contribution to wages for hours not worked

Employer contribution to wages for hours not worked

Employer contributions to National Insurance and Pension Contributions

 

July

 

70% up to £2,187.50

 

10% up to £312.50

 

Yes

 

August

 

60% up to £1,875.00

 

20% up to £625.00

 

Yes

 

September

 

60% up to £1,875.00

 

20% up to £625.00

 

Yes


What does this mean for employers?

From 1 July 2021, employers who have furloughed their staff will now need to contribute towards furloughed employees’ wages. This means the employee’s wages will now be made up of the reduced contribution from the Government, and the contribution from the employer.

Employers will need to continue to make National Insurance and Pension contributions, and can continue to choose to top up employees’ wages above the 80% total at their own expense should they wish to.

With Covid-19 restrictions still in place, and many industries unable to operate at full capacity, for some employers this additional financial contribution may mean that they need to consider redundancies or other alternatives, such as varying terms or agreeing salary reductions if they cannot manage the additional financial contributions.

For further assistance on the Coronavirus Job Retention Scheme, or any other employment matters, please contact our Employment Team who will be more than happy to assist you.

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