Last week the Chancellor announced that the furlough scheme will be further extended to last until 30th September 2021, meaning at that stage the scheme will have been running for 18 months.
This is likely to be welcome given the indications are that many businesses will not be able to open until around June, and the intention of the extension to September at this stage seems to be to allow for time for businesses to get back up and running and for customers to return.
The previous extension of the scheme in December, which extended it to April 2021, provided that the level of government contribution would remain at 80% of wages up to a maximum of £2,500 per month for hours not worked, with employers only having to fund employer pension and national insurance contributions. That is changing this time and the 80% contribution will only be in place until the end of June 2021.
From 1st July 2021, the government contribution will reduce to 70% of wages (up to a maximum of £2,187.50 per month) with employers expected to pay the other 10% as well as the pension/NI contributions. From 1st August 2021, this will increase to 20% with the government contribution reducing to 60% (up to a maximum of £1,875 per month). It remains the case that employees can be flexibly furloughed, and there is no requirement for employees who are furloughed now to have been furloughed at an earlier stage in order to qualify.
The cut-off point for employees to have started employment is also changing from 1st May 2021, at which time a claim can be made for employees who were employed on 2nd March 2021, as long as a PAYE submission has been made by 20th March 2021.
Given the scheme will soon have been running for a year, calculating what employees are due in differing circumstances may not be straightforward, and calculations based on earnings for the last tax year or the same pay period in the previous year will no longer be appropriate. The government has indicated that further guidance on calculating claims will be published in due course.