Furlough becomes FurLONG – as it is extended further until 30th September 2021
This afternoon, Rishi Sunak, the Chancellor of the Exchequer, set out this year’s Budget in the House of Commons.
One of the key topics that was discussed was the future of the Coronavirus Job Retention Scheme, commonly known as the Furlough Scheme.
It is somewhat mindboggling to think that this time last year, the term “furlough” hadn’t even been used in an employment law and HR sense, with the Chancellor first announcing the Furlough Scheme in an announcement on 20th March 2020.
Since then, the scheme has transformed in many ways. The scheme was initially due to last for three months, however due to the significant impact of the pandemic, which the Chancellor today stated has “fundamentally altered our way of life”, it has been extended on several occasions, with the most recent extension confirming that the Furlough Scheme would be extended until 30th April 2021. A total of 1.3 million employers have made a claim through the scheme since it started, totaling £53.8 billion in claims.
Today, the Chancellor has announced that the Furlough Scheme will be further extended until 30th September 2021, meaning that the scheme has been in existence, in some shape or form, for 19 months.
Although the scheme will continue to amount to 80% of an employee’s wages, it is important to note that from July, employers will be required to contribute a percentage of this amount, as set out below:
From 1st July 2021: employer required to pay 10% towards the hours their employees do not work.
From 1st August 2021: employer required to pay 20% towards the hours their employees do not work.
Some commentators are already questioning why the Furlough Scheme is being extended for so long, particularly when considering the Prime Minister’s “irreversible” road-map out of lockdown anticipates all restrictions in England being removed by 21st June 2021. We anticipate that this is to allow businesses to “wean” themselves off the scheme, and to also give the economy an opportunity to improve before business owners have to consider their positions.
Given the progress that has been made in battling the pandemic, it is incredibly likely that this will be the end of the Furlough Scheme. Businesses will now have to carefully consider their future staffing plans – to date, the Scheme has effectively allowed many businesses to avoid or delay having to consider making redundancies within their workplace. However, now that employers will have to contribute to the Furlough Scheme from 1st July, many business owners will have difficult decisions to make…
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