Prepare For The End of Furlough

For many businesses who have had to stop work over the past year due to the COVID 19 pandemic, the UK government’s furlough scheme has been a lifesaver, particularly the furlough scheme extension that was announced a few months ago.

The scheme has helped businesses to support their staff through a difficult time, protecting their staff and the business relationships that they have formed with them. However, with the easing of COVID-19 restrictions, many businesses have now been able to get back up and running and the furlough scheme support is starting to taper off and is due to end in September 2021...

Let us walk you through the furlough scheme extension and furlough rules in more detail, so you have all of the information you need to prepare your business for when furlough ends.

Businesses, big and small, have heard a lot about the UK’s furlough scheme, or 'job support scheme', over the past year or so. 

‘Furlough’ is the temporary leave that employees have had to take when they have no work to do because of the effects of coronavirus and government guidance. Thanks to the government’s Coronavirus Job Retention Scheme, businesses had been able to claim up to 80% (up to £2,500 per month) in total for the hours the employee was on furlough to protect their job and support them financially. 

Employers are still required to pay pension contributions for every worker under the furlough arrangement. Furloughed employees will not, however, receive statutory sick pay or annual leave benefits as they will not be completing any work during this period. 

The recent furlough scheme extension means that from 1 July 2021, the government will pay 70% of wages (up to £2187.50 per month) for the hours an employee is on furlough.

Any business or entity (such as a charity or agency) with a UK payroll can apply for furlough payments. 

Just be aware that the furlough rules state that to claim this money, a business must have created and started a PAYE payroll scheme on or before 19 March 2020, enrolled for PAYE online and own a UK bank account. 

If you are looking to claim for a time period after 1st May 2021, you can claim for anyone who was employed by you from 2nd March 2020 (which means the employer must have made an RTI submission notifying payment in respect of that employee to HMRC on or before 2nd March 2021) and you do not need to have claimed for this employee previously.

According to furlough rules, you can either fully furlough an employee, where they do not work any hours, or put them on flexible furlough, where they can sometimes work and sometimes be on furlough. An employee can be on flexible furlough more than once. 

Remember, claims for furlough days in June 2021 must be made by 14 July 2021 and from 1st July 2021, the level of grant you can receive will reduce each month.

So, when does the furlough scheme end and how can I prepare as a business?

The most recent furlough scheme extension has set the furlough period end date as 30th September 2021. Whilst the level of grant available to employers under the scheme will stay the same until 30 June 2021, from 1st July the government will pay 70% of wages (up to £2,187.50 per month) for the hours an employee is on furlough, and in August and September the government will contribute 60% of employees’ wages (up to £1,875 per month).  

This means that from 1st July, you will need to contribute towards the cost of your furloughed employees’ wages to get the grant, as your furloughed employees must still be paid 80% of their wages (up to £2,500 a month). As an employer, in July the furlough rules state that you will need to pay 10% (up to £312.50) of your employee’s wages, and 20% (up to £625) in August and September. 

So if you’ve been wondering ‘when does furlough end’? Make sure you are now aware of what payments you will need to make to your furloughed employees as you navigate the new furlough scheme extension and approach September’s furlough scheme end date.

The furlough scheme was introduced rapidly to protect jobs when many people suddenly had to stop work due to the pandemic. Due to the speed at which it was introduced made it difficult to fully grasp the furlough rules that had been put in place. Therefore some businesses may have inadvertently committed furlough fraud.  

One mistake many companies made was letting employees carry on work whilst being furloughed, often in order to cover another worker’s shift when they were self-isolating. This didn’t comply with furlough rules  but some employers did not realise this when they applied for financial support from the government. 

If you believe you committed furlough fraud, whether by accident or on purpose, make sure to seek legal advice as soon as possible to protect your interests.

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If you’re worrying about the end of furlough or any of the furlough rules, or you think you may have inadvertently misused the Government’s Job Retention Scheme (or furlough scheme), Lawbite is here to help.

We will give you access to great legal advice, whether it concerns furlough or another business matter. Not only can we quickly connect you to the top-flight lawyers on our platform at half the cost of similar lawyers, but with our easy to use online tools and state-of-the-art data science we will also make everything move much more smoothly.

So visit our Coronavirus legal advice pages or make an enquiry to get the legal support you need as a business as soon as possible.