It is hard to believe that the pandemic still takes hold. If you had asked me in March 2020 when the pandemic would end, I would have said Christmas. How wrong was I – and quite possibly most of you?! Even in 2021, the terms ‘social distancing’, ‘face coverings’ and ‘furlough’ are still very much on the tips of everybody’s tongues. It is one of these terms which I wish to address today, that being furlough.
As I am sure you are all aware, the Coronavirus Job Retention Scheme (more commonly known as the ‘furlough scheme’) was announced by the UK Government on 20 March 2020 in response to the COVID-19 pandemic. The scheme opened for business on 20 April 2020 and it was incredibly popular, with the vast majority of employers signing up to the scheme in order to protect the jobs of their employees whilst adjusting to life in the midst of a global pandemic. When the furlough scheme opened, participating employers were able to claim a grant from HMRC to cover 80% of furloughed employees’ wages, up to a maximum of £2,500 per calendar month for each employee. Employers, if they wished, could top up the remaining 20% from their own monies.
As the months passed and 1 July 2020 came along, changes were made to the scheme and the concept of ‘flexible furlough’ was introduced. This allowed furloughed employees to return to work on a part-time basis or remain fully furloughed. Employers would pay their part-time employees their normal salary for the days spent at work and claim furlough payments for the days on which they did not.
However, the main point of this blog for employers is that the scheme is changing yet again. As of 1 July 2021, employers will require to make a 10% contribution to furlough payments for the duration of July 2021. This contribution will increase to 20% for the duration of August and September 2021. Effectively, the Government will reduce their contribution to furlough payments from 80% to 70% in July and from 70% to 60% in August and September. The maximum amount therefore claimable by employers for the month of July will be £2,187.50, with this figure decreasing to £1,875.00 for the months of August and September.
For employers to be eligible for the grant, they must continue to pay their furloughed employees a minimum of 80% of their wages up to £2,500 per month for the duration of their furloughed period.
Employers should take note of the upcoming changes to the furlough scheme and ensure that they remunerate any affected employees accordingly. The furlough scheme is set to close on 30 September 2021, with the Government (at the time of writing) having no plans to extend the scheme further. Once the scheme ends, it is likely that employers will have some difficult decisions to make regarding bringing furloughed employees back to work or making them redundant. It is difficult to predict what will happen in September, but be rest assured that the Blackadders Employment Team are keeping a close eye on any developments!
If you need any advice regarding furlough, please get in touch with Blackadders’ Employment Team working in Aberdeen, Dundee, Edinburgh, Glasgow, Perth and across Scotland.
Blythe Petrie, Trainee Solicitor
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