Budget 2021: Furlough Scheme Extension Announcement

Written by EFP Editor
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Rishi Sunak announces an extension of the furlough scheme till September 2021.

On Wednesday, 3rd March, Chancellor of the Exchequer Rishi Sunak made his budget statement to the House of Commons. The budget is an annual briefing from the chief finance minister. It outlines the state of the economy and the plan for spending for the year ahead.

One of the most significant parts of the budget announcement was the decision to extend the furlough scheme to September. This will significantly impact millions of both employers and employees across the UK. As well as protecting millions of jobs as we move out of the pandemic.

What is the furlough scheme?

The furlough scheme, or the Coronavirus Job Retention Scheme, is a government scheme that pays 80% of an employee’s wages who cannot be at work due to the pandemic. The furlough scheme has been a lifeline for businesses in industries such as hospitality and retail, largely closed throughout the pandemic.

What does the extension mean?

The scheme was launched in March 2020 and supported over 11 million people throughout the pandemic. Originally intended to end in April, the announcement of the extension to September will be welcomed by the many people who are still unable to work because of the pandemic.

Up to now, employers were not obliged to make any contribution to their employees’ wages. The announcement stated that from July, employers must pay 10% of a furloughed member of staff’s wage. This will rise to 20% in August and September.

The extension comes after Boris Johnson’s roadmap out of lockdown, leaving many people feeling hopeful for the future of jobs and businesses.

In a statement on Tuesday evening, Rishi Sunak said:

“There’s now light at the end of the tunnel with a roadmap for reopening, so it’s only right that we continue to help business and individuals through the challenging months ahead – and beyond.”

How does this affect self-employed people?

Many people criticised the government’s Self-Employed Income Support Scheme (SEISS) for its exclusion of newly self-employed people. The scheme was based upon tax returns for 2018-19, which left many newly self-employed people stranded. As part of his budget announcement, Sunak confirmed an extension of the SEISS scheme to include those who became self-employed in 2019-2020. A decision that will support a further 600,000 people.

What is flexible furlough?2021-03-03T11:41:42+00:00

In the summer of 2020, the government launched a flexible furlough scheme that allows employers to bring their staff back to work part-time and be on furlough the rest of the time. This decision was made to aid the reopening of the economy and to give employers more flexibility over their staff. The government continue to pay 80% of the wages that staff do not work. Employers must pay their staff their full wage for hours they do work.

Can staff on furlough take holiday?2021-03-03T11:40:34+00:00

Yes. Furloughed workers continue to accrue statutory holiday entitlements and take annual leave as usual. Please visit the government website for details on holiday pay, bank holidays and more.

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