As you will no doubt have seen, the Chancellor confirmed in his Budget speech, that the Coronavirus Job Retention Scheme (the Furlough Scheme), which was due to end on 30 April 2021 has now been extended until 30 September 2021 – Changes to the Coronavirus Job Retention Scheme.

The level of grant available to employers under the Furlough Scheme will stay the same until 30 June 2021.

From 1 July 2021, the level of grant will be reduced and employers will be required to contribute towards the cost of their furloughed employees’ wages. To be eligible for the grant, employers must continue to pay their furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough.

The arrangements for the Furlough Scheme from May to September are as follows:

 

	May	June	July	August	September
Government contribution: wages for hours not worked	80% up to £2,500	80% up to £2,500	70% up to £2,187.50	60% up to £1,875	60% up to £1,875
Employer contribution: employer National Insurance contributions and pension contributions	Yes	Yes	Yes	Yes	Yes
Employer contribution wages for hours not worked	No	No	10% up to £312.50	20% up to £625	20% up to £625
For hours not worked employee receives	80% up to £2,500 per month	80% up to £2,500 per month	80% up to £2,500 per month	80% up to £2,500 per month	80% up to £2,500 per month

Employers can continue to choose to top up their employees’ wages above the 80% total and £2,500 cap for the hours not worked at their own expense.

It was somewhat inevitable that the Furlough Scheme would have to be extended beyond the end of April date, particularly with some lockdown arrangements likely to be in place until at least June 2021. As with the Furlough Scheme in September and October 2020, employers will, from July 2021, be required to contribute to the wages for hours not worked as the scheme is wound down, which coincides with the easing of lockdown.

With the cost of the Furlough Scheme already estimated at £53 billion, the extension of the scheme, whilst undoubtedly welcome will come at a significant cost.

If you have any queries about the extension of the Furlough Scheme, please do contact Matt Jenkin.