Further extension to the furlough scheme
In the Budget on 3 March 2021, the Chancellor Rishi Sunak announced a further extension of the furlough scheme. The scheme, which was due to end on 31 April, has now been extended until 30 September 2021.
Furlough extension – key facts
The level of grant available to employers under the scheme will stay the same until 30 June 2021.
From 1 July 2021, the level of grant will be reduced. Employers will be asked to contribute towards the cost of furloughed employees’ wages.
- The employer contribution to wages for hours not worked will be 10% (up to £312.50) in July and 20% (up to £625) in August and September 2021.
- The Government contribution to wages for hours not worked will be 70% (up to £2,187.50) in July and 60% (up to £1,875) in August and September 2021.
- The employee must continue to receive 80% of pay for hours not worked (up to £2,500 per month) until the end of September 2021.
The wage caps are proportional to the hours not worked.
Employers will continue to be responsible for employer National Insurance contributions and pension contributions throughout.
Changes to eligibility have also been announced. For periods starting on or after 1 May 2021, the employer can claim for employees who were employed on 2 March 2021, as long as they have made a PAYE RTI submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee. The employer does not have to have previously claimed for an employee before 2 March 2021 to claim for periods from starting on or after 1 May 2021.
The aim of the extension is to protect jobs as businesses gradually reopen and will come as a relief to many employers. The extension is longer than many may have anticipated. The Government’s roadmap out of lockdown in England sets out the aim that all businesses will have reopened by step 4, which is not before 21 June 2021. This extension aims to protect jobs and businesses beyond the end of lockdown. Our separate post on the roadmap out of lockdown in England is here.
We have updated our post on the furlough scheme, which can be found here.
Employers should, as always, continue to keep up to date with any changes to Government guidance on the furlough scheme, which can be found here:
19 March 2021
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