How is the Furlough Scheme changing on the 1st July 2021
The Coronavirus Job Retention Scheme (“CJRS”), or Furlough Leave as it is more commonly known, has been a lifeline for many employers since its introduction in spring 2020. The government has been widely praised for implementing the Scheme, which has been estimated to have supported some 11.6 million jobs throughout the Covid-19 pandemic.
Whilst the CJRS has undoubtedly prevented unemployment levels from skyrocketing over the past 15 months, it has also cost the government an estimated £66 billion. Now that we can hopefully see the light at the end of a very long tunnel, and with the reopening of shops and some hospitality, it is time for the CJRS to start winding down as we look to get the UK economy back on track.
Those familiar with the CJRS will recall that the government had always intended to reduce its contributions towards the end of the Scheme, which is due to be 30 September 2021.
The initial stage of that process has commenced today (1 July 2021). This means that whilst employers are still required to pay at least 80% of an employee’s salary costs (up to a cap of £2,500 per month) for a period of Furlough Leave, only 70% of this will be recoverable from the CJRS.
Put another way, as of today’s date, employers utilising the CJRS will have to contribute at least 10% to furlough payments made to staff, (together with their continued obligation to pay pension and Employer NI contributions), to begin to share the burden of these costs with the government.
From 1 August 2021 the government’s contributions will reduce again, to 60% of the employee’s wage, with a 20% contribution required from the employer, and the same for September 2021, until the end of the CJRS on 30 September 2021.
The most recent figures show that up until the end of June 2021, between 1.3 million and 1.9 million people remained on the Scheme, which is a significant decline from the 5.1 million peak in January this year.
With the thought of lockdowns hopefully nothing more than a distant memory, it really will be one final push to the finish line in the coming months as we continue to rebuild the economy, preserve jobs and bring employees back to work, into a new, post-pandemic world.
If you have any queries or concerns about the CJRS and Furlough Leave, or about employment law more generally, our specialist team of Employment lawyers would be happy to assist you further. Please email info@leathesprior.co.uk or call us on 01603 281153.