Changes to the Furlough Scheme August 2021

Furlough was introduced in early 2020 with the intention being to maintain job security for employees during lockdown.

Initially, the Government paid 80% of an employee’s wages up to £2,500. The scheme is being wound down and from 1 July 2021 the Government’s contribution to wages was reduced to 70% and employers were asked to contribute 10% to wages.

There will be a further change from Sunday (1 August 2021) as the Government’ contribution reduces further to 60%, leaving employers to top up wages by 20% to a maximum cap of £1,875 for the hours the employee is on furlough. Employers have discretion as to whether they wish to top up employee wages above the 80% and £2,500 cap at their own expense.

This remains the case until 30 September 2021 when the scheme is set to end, with the Prime Minister commenting in June that further extensions to the scheme are unlikely. It is hoped that by this time, most furloughed employees will be able to return to work if they have not already done so.

If you still have employees on furlough you will need to start thinking about your plans for the end of the scheme and employees possible return to work, which might involve restructures and potentially flexible working requests. If you are unsure and need some help and guidance or have any questions, please contact a member of the employment team who will be happy to assist you.

We can also support you if you are an employee on furlough and are facing a return to work. Please do get in touch. If you require any more information please contact Rianna Billington via Rianna.Billington@birkettlong.co.uk or call 01245 453812