Is Your Business Ready for the July 2021 Furlough Scheme Changes?

June 10, 2021 12:01 pm Published by

yellow banner which reads "Furlough Scheme Update"

The Coronavirus Job Retention Scheme (CJRS) – often referred to as ‘furlough’ or ‘the furlough scheme’ – has been extended until the end of September, with significant changes coming from 1st July 2021.

Since March 2020, the scheme has provided vital support to employers who have been impacted by the Coronavirus pandemic and has supported a total of 11.5 million jobs across the UK.

The 1st July brings about changes which reduce the percentage of employee wages covered by the Government as part of the gradual return to the workplace which is beginning to happen across the UK.

Find out more about the changes to the CJRS from 1st July and beyond, and what it means for employers and employees in our latest blog post.

What is Changing?

From 1st July 2021, the amount of grant available to employers will be reduced and employers will henceforth be expected to contribute towards the cost of furloughed employees’ wages.

Starting from the 1st July, the amount the Government will contribute towards the employee wage for the time the employee is on furlough will be reduced to 70%, with a maximum Government contribution of £2,187.50 per month. It is then the responsibility of the employer to provide the remaining 10%, a cost of up to £312.50 per month for hours spent not working.

During this time, employers must also continue to pay the employee ER National Insurance Contributions (NICs) and Pension contributions for the hours the employee is on furlough.

From August, the Government will reduce their contribution to cover 60% of the employee wage up to £1,875 per month for the time the employee is on furlough. The remaining 20% must be topped up by the employer and ER NICs and Pension contributions must continue to be paid by the employer.

From September, the Government will continue to pay 60% of the employee wage for the time the employee is on furlough and the employer will continue to top up the remaining 20% as well as pay ER NICs and Pension contributions. At the end of September, the current furlough scheme will end.

 

July August September
Government wage contribution 70% up to £2,187.50 60% up to £1,875 60% up to £1,875
Employer to pay National Insurance contributions and pension contributions Yes Yes Yes
Employer wage contribution 10% up to £312.50 20% up to £625 20% up to £625

 

Please note that this information is correct at the time of writing and subject to change, please refer to the GOV UK website for up to date details of changes to the Coronavirus Job Retention Scheme.

As the scheme is not set to change until the 1st July, the level of grant available under the CJRS will stay the same until the 30th June 2021. This means that for periods ending on or before the 30th June 2021, employers can continue to claim 80% of the employee wage for hours spent on furlough, up to a maximum of £2,500 per month.

Employers should also note that from 1st July, employers can continue to furlough employees on a flexible basis, for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked.

Why are These Changes Being Made?

The changes to the CJRS serve as part of a gradual return to the workplace. The financial burden on the treasury will be eased, yet employers will still receive some support from the Government in paying employees’ wages up until the end of the scheme on the 30th September.

Despite the changes in Government contribution, it’s important to note that the level of support employees receive (80% of their usual pay) will not change until the scheme ends in September 2021.

Need a Hand?

At FCF, we have been supporting businesses throughout the Coronavirus pandemic with successful furlough reclaims and help with grants. We hope that all businesses are able to utilise the schemes that are available to support them through these difficult times.

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This post was written by Steph Roffey

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