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Furlough scheme to be extended until September

by: Emma Lunn
  • 03/03/2021
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Furlough scheme to be extended until September
The Coronavirus Jobs Retention Scheme will run until the end of September, chancellor Rishi Sunak has announced.

 

The furlough scheme was first introduced by Sunak in March 2020, when the government paid 80 per cent of furloughed workers’ wages up to a monthly maximum of £2,500.

Employees on furlough will still receive 80 per cent of their wages until the scheme ends – but employers will gradually pay more.

Between now and 30 June, the government will pay 80 per cent of wages for hours not worked, up to £2,500 a month. Employers will be asked to cover national insurance and employer pension contributions.

But in July the government will only pay 70 per cent, with employers expected to pay the remaining 10 per cent, plus national insurance and employer pension contributions.

In August and September the state will pay 60 per cent and employers will have to pay 20 per cent.

Workers can either be on full-time furlough, or work part-time and be furloughed for the hours not worked. Employers will have to cover wages at the normal rate for any hours worked.

The scheme was extended until the end of April in December – it was previously meant to end in March, following several extensions.

Sunak also announced fourth and fifth Self Employment Income Support Scheme (SEISS) grants for self-employed workers, and widened eligibility for the scheme.

Kate Palmer, HR advice and consultancy director at Peninsula, said: “An interesting development is that, once again, employers will be asked to start contributing to the scheme from July, something that we previously saw introduced last year as the government aimed to wind the scheme down before it was extended.

“While this may at first glance be concerning for employers, they should remember that by July, the government is aiming for life to be, essentially, much more normal, and likely anticipate the need to use the scheme will be much diminished. However, whether this means they will start to clamp down on who can actually use it following 21 June does remain to be seen.”

James Andrews, personal finance expert at money.co.uk, said: “Following several days of speculation and debate surrounding the future of furlough, the chancellor has announced that the scheme is to be extended beyond April, up until the end of September 2021.

 

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