Commonly known as the Furlough Scheme, but correctly called Coronavirus Job Retention Scheme, it has provided an essential lifeline to employers, helping them shoulder the employment costs for employees who were unable to work or who work reduced hours due to the restrictions imposed because of Covid-19.
Currently, the scheme comes to an end in September 2021, but some changes are looming from July 1st 2021, and these must be factored in to payrolls.
Changes to Furlough from July 1st 2021
The current 80 per cent furlough grant, up to a maximum of £2,500 per employee each month, will continue until 30 June 2021.
However, starting from 1 July 2021, the amount paid by the Government will gradually be reduced, and employers will have to start making additional contributions in a gradual tapering, as follows:
- From July, Government support will be limited to 70 per cent, with the remaining 10 per cent provided by the employer.
- from 1 August until the end of the scheme on 30 September 2021, employers will be expected to contribute 20 per cent, with the Government the remaining 60 per cent.
Employers must also continue to pay employers National Insurance and pension contributions on the full amount being paid to employees.
The Furlough Scheme has been extended to more employees
New employees who have not previously been eligible for furlough can be furloughed for the first time from 1 May 2021 onwards, if they were included in a Full Payment Submission to HMRC by 2 March 2021.
The impact of Furlough on Payroll
In the early days of the first lockdown when the Furlough scheme was first introduced, it was a bit of a mad rush to get all the changes done in time. Once done, however, the system has worked smoothly and we continue to do everything payroll for our client.