Changes to the Furlough Scheme in July 2021

Written by EFP

There is a change coming to the government’s Coronavirus Job Retention scheme in July 2021. If you are an employer with staff on furlough, make sure to stay updated with these changes and how they affect your business. Have a read below to find out the full details.

What is the Furlough Scheme? 

Announced in March of 2020, the Coronavirus Job Retention Scheme, also known as the furlough scheme, ensures that staff continue to be paid throughout the pandemic, even if Covid-19 impacted their workplace. Currently, the government cover 80% of staff wages, and the employer must pay national insurance contribution and pension contributions.

The government cover wages of up to £2,500 a month. Employers are free to top up their staff’s wages, but there is no obligation to do so.

We recently wrote an article on the extension of the furlough scheme until September 2021, as announced by Rishi Sunak in the 2021 Budget. However, there have been some changes to how the scheme will run over the summer.

How Will Furlough be Changing in the Summer? 

From the 1st July 2021, staff on furlough will continue to receive 80% of their wages. However, employers will have to pay 10%, and the government will cover the other 70%.

And then, from the 1st August 2021, the government contribution will lower to 60%, and employers must top this up with 20% of employees’ wages.

This means that until the end of September 2021, nothing will change for staff on furlough, but employers must prepare to begin contributing towards furloughed staff wages. The 10% contribution in July and 20% in August and September is not optional, and employers must pay it by law.

Will There be Any Changes to National Insurance Contributions and Pensions?

No. Just as employers are obliged to pay their staff’s national insurance contributions and pensions contributions now, they will continue to do so through the entirety of the scheme.

Do I Have to Furlough My Staff for the Whole Week?

No. You can utilise the flexible furlough scheme, which allows employers to choose when they would like their staff to work and place them on furlough for the remainder of the time. You are also entitled to change the number of hours worked and on furlough; however, you must claim for a minimum period of seven days at a time. If your staff are on flexible furlough, they will receive 80% of their wages for the hours they do not work, and you must continue to pay them 100% for the hours they do work.

Can My Staff Do Any Work for Me While on Furlough?

No. When staff are on furlough, they cannot contribute to your organisation or any partner organisations, including providing any services or making any money for you. However, staff can train and do voluntary work. 

For more employment support and advice, visit the news section of our website. We regularly upload guides, useful information and breaking news.

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