What are the latest changes to the Furlough Scheme (July 2021)?

Posted in : Seamus Says - Employment Law Discussion on 2 July 2021
Seamus McGranaghan
O'Reilly Stewart Solicitors
Issues covered: Covid-19, Furlough Scheme, Pay, Wages

The furlough scheme is due to disappear in its entirety come the end of September, but a few changes came through yesterday, 1 July. Seamus, do you want to talk us through what those changes are or what we can expect from that?

Seamus: Yeah. Look, furlough has been in now from March 2020. I think we're all fairly clear and up to date on it. It is due to come to an end on 30 September. And I think both Boris Johnson and the Chancellor, Rishi Sunak, said that they want to end it at that time. But we've been there before. You would be worried about maybe coming back in towards the end of September when it was due to end last year also, and then it was extended. Hopefully we don't have to go down that road. 

But as and from 1 July, so as and from yesterday, there is a tapering off and, as some of the outlets have called it, a winding down of the furlough scheme. I think even the use of that sort of language of winding down maybe sets the scene for where things might be on a government basis. 

But from 1 July, the government will only pay 70% of a worker's salary and the employer is required to pay the remaining 10%. And that remains up to the usual monthly limit of £2,500. So that reduces the cap from the government contribution to £2,187.50. 

And then at the end of July, so only four weeks away, in August and September, it reduces again down to 60% of the worker's salary from the government, and the employer then having to make up the remaining 20%. And again, the same limit will apply of the £2,500 a month. I mean, employers . . . 

Christine: Sorry, Seamus. We just lost the sign there slightly on your last point, if you wouldn't mind just reiterating that. 

Seamus: Yeah. Sorry. From August and September, the government will pay 60% of a worker's salary, and the employer will have to make up the 20% to the same limit £2,500. 

And as we know, employers have always had to pay pension and National Insurance contributions for their workers in addition to that, in any event. 

So the idea behind that would really be where the government would be almost encouraging employers to start to move employees back, off furlough and back to work again, with the increase then that the employer has to make to the scheme. 

Those are the two changes at the minute, and we'll just need to wait to see as to if there are any developments in relation to that come late August and end of September time. 

Christine: I suppose that's the thing. We are dealing with quite a lot of guesswork at the minute. Furlough has been extended and extended. The lockdowns have come and gone and come back again. So, we are kind of keeping our eye on the Delta variant, and Delta Plus I heard talked about yesterday worryingly. So I suppose it's quite a lot of guesswork a lot of the time. We're kind of hopeful that this is the end, but fingers crossed it is. 

So, I think that kind of brings us to the end of our discussion, everybody, unless anyone has anything else to add to that.

Seamus: Well, the only other thing that I was going to maybe mention, Christine, was just in relation to when we get to the end of September at the end of the furlough scheme and will that result in employers having to make decisions in and around bringing employees back or making them redundant. 

I did read that I think there's a small increase in unemployment that is expected, but it just might be interesting for any of the listeners that what was forecasted whenever the pandemic started was that 1 in 10 workers would become unemployed. And instead, that unemployment rate is currently less than 1 in 20. 

So, you can really see the benefit of the furlough scheme and as to what it's done. I mean, it has saved . . . again, the total was 11.5 million jobs have been supported since March 2020. So it has been great. 

While that tails off and while it winds down, those sorts of issues and concerns will be on every employer's mind, I would have thought. 

Christine: Yeah. I suppose just kind of watch this space. But we hope that it's not going to lead to big levels of redundancy. I suppose business have been struggling and it may well lead to that. We can only hope really. 

Brilliant. Thank you very much, Seamus and Helen, for your insights today. It's been great talking to you. And thanks for being on my first ever webinar with me. It's been great. 

Seamus: Thank you. It was excellent. Thank you. 

Helen: Thank you, Christine. 

Christine: And thanks everybody for joining us. The Employment Law at 11 will be back 6 August. It would be great to see a good lot of you here again. 


This article is correct at 02/07/2021

The information in this article is provided as part of Legal-Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.

Seamus McGranaghan
O'Reilly Stewart Solicitors

The main content of this article was provided by Seamus McGranaghan. Contact telephone number is 028 9032 1000 or email seamus.mcgranaghan@oreillystewart.com

View all articles by Seamus McGranaghan