Furlough Scheme Extended Until the End of September: What Does it Mean for Employers?
On 3 March 2021, Chancellor Rishi Sunak announced his annual budget for 2021. The budget included a number of measures for employers, most notably, the extension of the Coronavirus Job Retention Scheme (CJRS) until the end of September 2021.
The CJRS was previously scheduled to end on 30 April 2021 so this is a welcome development for business, but it is important to note that there will be additional costs for employers to consider when utilising the scheme.
What will change for employees?
Sunak confirmed in his address to the House of Commons that there will be no changes for employees who will continue to receive 80% of their wages for hours not worked, subject to the cap of £2,500.00, until the end of September 2021.
What will change for employers?
At present, employers are not required to contribute towards employees’ wages save for National Insurance and pension contributions.
However, the government support scheme will begin to taper down from the start of July when employers will be required to contribute towards wages as follows:
- July 2021: employers will be required to contribute 10% towards the hours that their employees do not work.
- August and September 2021: employers will be required to contribute 20% towards the hours that their employees do not work.
- Employers will be required to continue to pay all National Insurance and pension contributions in addition to the gradual contributions set out above.
Although this development to the scheme will lead to additional costs for employers, the government anticipates that the majority of businesses will be in the process of reopening by this stage in accordance with the Prime Minister’s roadmap to ease lockdown restrictions.
How should employers prepare for this change?
At this stage, we would recommend that employers consider the number of employees who are currently on furlough to identify the projected additional financial costs of these new measures to their business.
The CJRS has already been extended on several occasions, and Sunak has not ruled out further extensions to the scheme. However, it is currently projected that the scheme will taper off once the economy begins to open up should the Prime Minister’s roadmap be executed to plan. This will be largely dependent on the continued success of the vaccination rollout.
If you need advice or have any queries about the extension of the CJRS or in respect of the scheme more generally, please contact Paul Chamberlain or another member of the employment team at JMW Solicitors LLP on 0345 646 0342.
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