Changes to the UK furlough scheme – July 2021
In March, Chancellor Rishi Sunak announced that the furlough scheme – which had previously been extended to the end of April 2021 – was to be extended until the end of September 2021.
Employees on furlough would continue to receive 80% of their usual salary for hours not worked, up to a maximum of £2,500, and could be furloughed on a part-time or full-time basis.
Until 30 June, employers were liable only for National Insurance and employer pension contributions which, for the average claim, accounts for approximately 5% of total employment costs, and the full 80% of wages were met by the Government.
As of 31 May 2021, there were 58,600 people on furlough (full time and part time) in Northern Ireland, a reduction of 34,300 from the previous month. That is the lowest figure for people on furlough since the Coronavirus Job Retention Scheme was introduced.
What is changing from 1 July?
From 1 July, employers are required to pay 10% of the wage costs for hours not worked by staff who are on furlough, rising to 20% in August and September. The Government will pay 70% in July, reducing to 60% in August.
Employers can continue to choose to top up their employees’ wages above the 80% total at their own expense.
What has not changed?
Employers can continue to furlough employees for any amount of time and any work pattern, while claiming the grant for the hours not worked.
The aim of the scheme is to allow companies to continue employing staff at a time when there may be no work, or not enough work, for them to do, or the organisation has been affected by the Covid-19 pandemic. It may also be used to support parents who have childcare or other caring responsibilities, as well as people who are clinically extremely vulnerable.
An employee can be furloughed whether they are on a full-time, part-time, agency, flexible or zero-hour contract.
For periods of furlough starting on or after 1 May 2021, an employee must have been employed on 2 March 2021, and the employer must have made a PAYE Real Time Information (RTI) submission to HMRC for that employee between 20 March 2020 and 2 March 2021. It is not necessary for an employee to have been furloughed prior to 2 March 2021 in order to be furloughed for any period starting on or after 1 May 2021.
It is important to note that an employer is under no obligation to put an employee on furlough.
What are an employee’s rights while on furlough?
While on furlough an employee can take on other jobs, so long as this is permitted in their contract of employment, and can take part in training, or volunteer for an unconnected organisation. The employee retains all of their employment rights, including annual and parental leave, while on furlough. Employers may wish to engage with their employees who are on furlough about using their paid holiday leave entitlements.
If you are an employee who is planning to take paid parental leave or adoption leave, this will be paid based on your usual earnings, rather than on your furloughed rate. This is a complex situation so we advise anyone with questions to seek independent advice on what is best for their family.
Government guidance on furlough
If you are an employer, the Government’s guidance on the furlough scheme is available here.
If you are an employee, the Government’s guidance on the furlough scheme is available here.
Contact us for advice
We would encourage any individuals or employers wishing to find out what financial support they may be entitled to, to contact our Family Benefits Advice Service for free, impartial and confidential advice on Freephone 0800 028 3008 or email email@example.com