Changes to furlough scheme started on 1st July 2021

The furlough scheme is currently envisaged to end on 30 September 2021 but there are changes as to how the furlough scheme will operate in July, August and September 2021.

Prior to 1^st July 2021, the government covered the full 80% of employee earnings (not including employer National Insurance and pension contributions) which furloughed employees are entitled to under the furlough scheme, subject to a cap of £2,500 per month.

From 1^st July 2021 onwards, in addition to the employer National Insurance and pension contributions which employers are already required to cover, employers will also be required to make a 10% contribution in respect of furloughed hours in July, with the government’s contribution capped at £2,187.50. This will then increase on 1^st August 2021 to the employer having to make a 20% contribution for the months of August and September 2021, with the government’s contribution for those months being capped at £1,875.

These increased contributions will apply to the unworked hours of any employee on ordinary furlough leave or on flexible furlough leave.

It should be clear that the percentage of earnings which employees will require to receive from 1^st July 2021 until 30^th September 2021 must remain the same as it has been to date, namely 80% and subject to a cap of £2,500. It is the ability of employers to recover the furlough pay from the government which is reducing on the sliding scale in the months to come.

Employers are able to ‘top up’ furlough pay in excess of the above minimum rates at their discretion and are being encourages to welcome back furloughed employees, taking a holistic approach to health, safety and wellbeing.