As of 1st July 2021, the Furlough Scheme is changing, with the Government grant reducing from 80% to 70% (of furloughed employees’ pay for unworked hours). This will increase the costs for businesses, as employers will still have to pay furloughed employees 80% of their pay for unworked contractual hours, (meaning employers must now contribute 10% towards the furlough payments, in addition to NI and pension).
From 1st August 2021 until the closure of the furlough scheme, the Government grant will further reduce to 60% of furloughed employees’ pay for unworked hours, increasing the employer contribution to 20%). This rate will be maintained until the scheme is due to finish at the end of September 2021 (subject to no further government changes).
This table shows the funding position from July 2021:
| July | August |
September
|
|
| Government contribution: wages for hours not worked | 70% up to £2,187.50 | 60% up to £1,875 |
60% up to £1,875
|
| Employer contribution: employer National Insurance contributions and pension contributions | Yes | Yes | Yes |
| Employer contribution: wages for hours not worked | 10% up to £312.50 | 20% up to £625 |
20% up to £625
|
| Employee receives (for hours not worked) | 80% up to £2,500 per month | 80% up to £2,500 per month | 80% up to £2,500 per month |
It’s also important to remember that the Government still has restrictions on who can be placed on furlough. For an employee to be able to benefit from the furlough scheme they must have been on payroll as of 2nd March 2021 (an RTI submission to HMRC must have been made).
Employers can still furlough employees for any amount of time and any work pattern providing they issue the correct documentation and the employee is eligible based on the above requirements. Please note that you cannot claim the grant during an employee’s notice period.
If you need any advice on the changes to the furlough scheme, please don’t hesitate to contact us on 01302 341 344.
By Kris Kerins BSc (Hons) PGC (Tech Mgmt) – HR Business Partner