The Furlough Scheme enters its final weeks

Furlough

Furlough was introduced in March 2020, with the intention to stop employees being laid off by their employers during the pandemic lockdown.

Initially the government paid 80% of the wages of people who couldn’t work, or whose employers could no longer afford to pay them – up to a monthly limit of £2,500.

By the time we arrived at July 2021 employers were required to pay 10% of salaries – with the government’s contribution being lowered to 70%.

And now during August and September (as it comes to an end) the government’s contribution was diluted further where it now pays 60% and employers pay 20%.  (Employers also have to pay employee pensions and National Insurance contributions.)

According to the government website July figures show 1.6 million people were on furlough and says that 11.6 million jobs have been supported since the scheme began.

The Cost

From March 2020 to the end of September 2021, the cost of furlough will come to around the staggering sum of £66bn.

At the start of this pandemic it was thought that more than one in 10 workers would become unemployed.  Instead the unemployment rate is currently less than one in 20.

As the furlough scheme enters its final weeks employers will be deciding what they must do with their furloughed workforce.  In most cases, an employer should have already started the redundancy process if it’s planning to let workers go by 30 September.

The Furlough Scheme in September

The government will pay 60% of wages, up to £1,875 per month, for the hours the employee is furloughed.

As before, employers must top up their employees’ wages.  Employees must receive at least 80% of their wages (up to £2,500) for hours not worked.

Employers can claim furlough pay for employees for September up until the 14 October 2021.  Any amendments must be made by 28 October 2021.

ACAS

ACAS (Advisory, Conciliation and Arbitration Service) is an independent public body which received funding from the government and provides free and impartial advice to employers and employees.

It has very helpful guidance and support if you are an employer looking for help as the furlough scheme comes to an end this month.  Have a look at the links below:

https://www.acas.org.uk/furlough-letter-templates

https://www.acas.org.uk/redundancy

Payroll

If you have any questions regarding the ending of furlough and how it relates to your payroll please call us on 0161 703 8353 and ask for Christine or Fiona – our payroll team.