THE furlough scheme is set to end in September and this date hasn’t been extended despite delays to restrictions easing.
The coronavirus job support scheme will continue to run for another two months, as it supports people’s wages during the pandemic.
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Originally the scheme was only supposed to run until March this year but plans to extend it until September were outlined in the Budget a few months ago.
However, support has already started to wind down, even though “freedom day” has been postponed to July 19.
Companies are now expected to start chipping in for the cost of paying furloughed workers.
The delay to freedom day is due to covid rates increasing across the country and more cases of the delta variant being reported.
This means nightclubs have been delayed from opening as well as workers discouraged from returning to the office on the date.
Despite these workers still not being allowed to return to their jobs, furlough payments won’t be extended beyond September to compensate for this new month long delay.
Here, we explain all you need to know about the furlough scheme and when it will end.
When does the furlough scheme end?
The Chancellor announced in the Budget on March 3, 2021, that the furlough scheme will be extended until September this year.
It’s hoped the Government’s wage support will help firms get back on their feet after lockdown eases.
More than 4.2million people were on furlough at the end of March this year, with almost 40% of employers claiming for their staff.
However, the scheme is changing and from this month employers are starting to chip in.
Businesses now have to contribute 10% of the cost, increasing to 20% in August and September as the economy reopens.
The Coronavirus Job Retention Scheme has protected more than 11million jobs since its creation in March 2020, with Mr Sunak promising further help in the “challenging months ahead – and beyond”.
Mr Sunak said it was “only right we continue to help businesses and individuals through the challenging months ahead”.
He added: “Our Covid support schemes have been a lifeline to millions, protecting jobs and incomes across the UK.”
How has the furlough scheme changed and will it be extended again?
Under current furlough rules, employees get up to 80% of wages paid for hours not worked, up to a maximum of £2,500.
From this month, the amount employers contribute will be 10%, rising to 20% in August and September.
At the moment, employers are still able to choose to top up employee wages above the scheme grant at their own expense – but they don’t have to.
Workers also get their usual full salary for any hours they do work.
For hours not worked, employers will have to cover National Insurance and pension contributions.
Workers can also be on any type of contract to be furloughed as part of current rules.
The extension to September is the latest continuation of the scheme but it has been extended a number of times already.
But it won’t be extended again, now plans of restrictions lifting have been delayed by a month.
The Chancellor first announced the support on March 20, 2020, at the height of the pandemic, and said it would originally only last until May 31, 2020.
It was then extended to October 2020, and when this deadline approached, and was extended again until December before being extended into spring 2021.
Who is eligible for the furlough extension?
The scheme remains open to any UK organisation with employees, including businesses, charities, recruitment agencies and public authorities, providing they have a UK bank accounts and UK PAYE schemes.
Employees being furloughed from May 1 until the end of September must have been on a PAYE payroll on March 2, 2021.
Workers can be on any type of contract, meaning you could still be furloughed if you are part-time or a contract worker.
It is down to the organisation to arrange the help, rather than the employees.
Can I be made redundant if I’m on furlough?
EVEN though furlough is designed to keep workers employed, unfortunately it doesn’t protect you from being made redundant.
But it doesn’t affect your redundancy pay rights if you are let go from your job amid the coronavirus crisis.
Your employer should still carry out a fair redundancy process.
You will be entitled to be consulted on the redundancy lay-off first and to receive a statutory redundancy payment, as long as you’ve been working somewhere for at least two years.
How much you’re entitled to depends on your age and length of service, although this is capped at 20 years. You’ll get:
- Half a week’s pay for each full year you were under 22,
- One week’s pay for each full year you were 22 or older, but under 41,
- One and half week’s pay for each full year you were 41 or older.
Sadly, you won’t be entitled to a payout if you’ve been working for your employer for fewer than two years.
There should be a period of collective consultation as well as time for individual ones if your employer wants to make 20 or more employees redundant within 90 days or each other.
You are also entitled to appeal the decision by claiming unfair dismissal within three months of being let go.
If you’re made redundant after your company has gone into administration you can claim redundancy pay via Gov.uk.
Large companies (with more than 250 employees) have to meet a financial impact test, as part of the rules.
It means the scheme is only available to those whose turnover has stayed the same or is lower than before Covid-19.
There is no financial impact test for SMEs or charities.
If you’re self-employed, details of the fifth and final instalment of the support scheme grants have been revealed as well.
What is happening to the Job Support Scheme?
The Job Support Scheme (JSS) was set to replace furlough and run for six months from the start of November 2020 to the end of April 2021.
It’s not clear yet what will happen with JSS, announced in October, and if it will be available after the furlough scheme ends.
But it is unlikely it will roll out as the economy will no longer be hit with Covid restrictions and will be fully open.
The scheme aimed to continue to support businesses and their employees facing coronavirus-related woes, and was expected to come into effect in December.
But rising cases of coronavirus, another lockdown and a troubling economic outlook led Mr Sunak to continue the furlough scheme.
Under the JSS, employees could work one day a week and earn up to 73% of their wages.
It was designed to help employees working for businesses that shut down in areas put under previous Tier 2 and Tier 3 restrictions.
Employees on the scheme would have needed to have worked a minimum of 33% of their hours to be eligible, and businesses had to contribute a third of wages.
But the scheme was only set to sun until April 30 so there is no more information on whether it will return when the furlough scheme ends.
What do the furlough changes mean?
After September, all workers should be off furlough and back working.
But concerns have been raised over whether changes to the furlough scheme in the meantime could mean thousands of job losses.
There are fears the scheme changes could prompt redundancies because employers can’t afford to take on the increase of costs.
Experts have warned that cash-strapped hospitality businesses in particular might not be able to cover the costs of paying for furlough – and could let thousands of staff go.
This is because lockdown lifting has been delayed beyond the date furlough support starts to be reduced.
So while the changes to the furlough scheme shouldn’t see your pay docked, it could mean that you are at greater risk of being made redundant.
More than 160,000 Brits who have lost their job due to the Covid crisis were entitled to a bumper package of support.
Here’s how to get furloughed if you’re struggling juggling childcare and working from home.
And we explain your redundancy rights if you’ve been furloughed.