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Reminder of further changes to the Furlough scheme

From 1 August there will be a further winding down of the Coronavirus Job Retention Scheme.

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Published 30 July 2021

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Further to our update last month on the winding down of the Coronavirus Job Retention Scheme (CJRS) , employers should be aware that from 1 August 2021, they will be required to make an increased contribution towards furlough pay.

In August and September 2021, employers will need to contribute 20% towards furlough pay, with the government contribution reducing to 60% (up to a cap of £1,875 per employee per month). Employers will continue to be responsible for employers’ NICs and pension contributions.

The CJRS has been extended four times since its introduction in March 2020. One of the reasons it was extended to 30 September 2021 was to give businesses some certainty and avoid the need for a further extension. However, we are now in the midst of yet another wave and if this continues or becomes worse in the final quarter this year then the government will come under further pressure to reconsider.

The latest statistics show there were approximately 1.6 million unemployed people in the UK in the three months to May 2021 which represents 4.8%. Obviously, these numbers do not include those on furlough and it will be interesting to see whether the number significantly increases once the scheme comes to an end. Paradoxically, due to Covid and Brexit, we have the worst labour shortage since 1997 following the departure of overseas workers in areas such as transport, hospitality and construction and in higher-paid sectors including finance, IT, accounting and engineering. This has led the CBI to flag the urgent need for businesses and government to reskill furloughed and prospective workers as increasing gaps in the workforce has the potential to slow down the UK’s much needed economic recovery.

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Shorter Reads

Reminder of further changes to the Furlough scheme

From 1 August there will be a further winding down of the Coronavirus Job Retention Scheme.

Published 30 July 2021

Associated sectors / services

  • Employment law for employers
  • Employment law for employees

Authors

Further to our update last month on the winding down of the Coronavirus Job Retention Scheme (CJRS) , employers should be aware that from 1 August 2021, they will be required to make an increased contribution towards furlough pay.

In August and September 2021, employers will need to contribute 20% towards furlough pay, with the government contribution reducing to 60% (up to a cap of £1,875 per employee per month). Employers will continue to be responsible for employers’ NICs and pension contributions.

The CJRS has been extended four times since its introduction in March 2020. One of the reasons it was extended to 30 September 2021 was to give businesses some certainty and avoid the need for a further extension. However, we are now in the midst of yet another wave and if this continues or becomes worse in the final quarter this year then the government will come under further pressure to reconsider.

The latest statistics show there were approximately 1.6 million unemployed people in the UK in the three months to May 2021 which represents 4.8%. Obviously, these numbers do not include those on furlough and it will be interesting to see whether the number significantly increases once the scheme comes to an end. Paradoxically, due to Covid and Brexit, we have the worst labour shortage since 1997 following the departure of overseas workers in areas such as transport, hospitality and construction and in higher-paid sectors including finance, IT, accounting and engineering. This has led the CBI to flag the urgent need for businesses and government to reskill furloughed and prospective workers as increasing gaps in the workforce has the potential to slow down the UK’s much needed economic recovery.

Associated sectors / services

  • Employment law for employers
  • Employment law for employees

Authors

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