01 July 2021
Furlough scheme starts to wind down
From today (1 July), employers must pay ten per cent of their furloughed employees' salary, while the government will pay the remaining 70%, up to a £2,500 monthly limit. Previously the government was paying the full 80%, while employers could pay the remaining 20% of their workers’ salaries, but this was not mandatory.
Over the next three months, workers will still receive 80% of their wages, but employers will have to take on more of the costs of the scheme as it tapers off. The Institute of Fiscal Studies believes this will lead some businesses to consider whether they can retain their staff after the furlough scheme ends.
The Treasury said: "We deliberately went along with our support to provide certainty to people and businesses over the summer. The furlough scheme is in place until September and is amongst the most generous schemes in the world.”
The Office for National Statistics has said that the numbers on furlough decreased in June, with around 1.3 million to 1.9 million people still on the scheme.
From 1 August, the employers' contributions will rise to 20%, with the government's contribution reducing further. The scheme will end on 30 September 2021.
Chris Brazier, employment partner, B P Collins says:
“Employers and their staff will be experiencing further significant changes over the next few months as the furlough scheme ends and the delayed opening up becomes a reality. Considering the volume of challenges and changes faced over the past 15 months, they can be forgiven for being a little wary of what comes next. The employment team at B P Collins are here to support and help navigate the road ahead for our clients.”