What Happens After Furlough Ends?
What happens after furlough ends is a key point of interest for UK business owners at the moment, as the Coronavirus Job Retention Scheme (commonly referred to as the furlough scheme) is ending on the 30th September 2021.
The furlough scheme was set up on the 20th March 2020, in response to the disruption to businesses caused by the Covid-19 pandemic. It allows you to claim a grant to continue paying your employees if you cannot afford to pay them because of the impact of Covid-19 on your business. As a result, your employees were still given 80% of their normal pay and it enables you, as a business, to retain your staff and avoid making people redundant.
Furlough was expected to end on the 31st October 2020, but the second wave of Covid-19 meant that the scheme was extended as businesses continued to struggle with the economic impact of the pandemic. It is estimated that 11.5 million people have been kept in work because of the furlough scheme.
However, with the rollout of the vaccine and the easing of restrictions, there has been a recent decline in the number of people using the furlough scheme. According to the most recent data, around 1.5 million employees remain on the furlough scheme.
If you are wondering what happens after furlough ends, keep reading this article.
How Will the End of Furlough Affect Your Business?
If you and your business have been using the UK furlough scheme for support during the Covid-19 pandemic, you need to think about what happens after furlough ends and how it will affect your business. You should consider the following points:
- Monitoring money and cash flow
Ensuring that you monitor your cash flow is important for your business. Cash flow refers to the net balance of cash moving into and out of your business at a specific point in time. After furlough ends, you will need to review your business costs and look for savings where possible. Although government support is stopping with regards to the furlough scheme, if your business is still being affected by the pandemic you can apply for a government recovery loan.
LawBite’s YouGov poll has revealed that thousands of SMEs feel threatened by the repayment of government Covid loans. If you need legal advice, do not hesitate to contact us!
- Returning employees from furlough to full-time work
If you want to bring back your full-time employees, you must consider a number of factors. You will need to be realistic in order to determine whether your employees’ jobs are viable. After the end of the furlough scheme, many businesses will be able to recover because of the continued easing of Covid-19 restrictions that has led to an increase of people going out and spending money. However, if your business is in a sector that is still being affected, such as events or travel, you must consider whether you can afford to keep your previously furloughed employees on.
- Bringing employees back from furlough and having them work reduced part-time hours
When considering what happens after furlough for your business, you might conclude that you cannot afford to rehire all of your employees full-time, but still need employees to work for you. Therefore, you could choose to rehire your employees on a part-time basis. When thinking about offering your employees part-time work or consider job sharing.
- Letting go of employees who are no longer viable
Unfortunately, it could be the case that after the furlough scheme ends, you may be unable to keep some of your employees. Making employees redundant is a difficult decision, but if you are unable to pay them without the UK furlough scheme, letting them go may be your only option. Read our recent blog post on ‘What is Statutory Redundancy Pay?’ to find out more information on redundancy.
It is important to understand that flexible furlough is also ending on the 30th September 2021. Flexible furlough is an additional scheme that was introduced on the 1st July 2020. If you have furloughed an employee, flexible furlough means that they are allowed to return to work on a part-time basis but retain their furloughed worker status. These employees are allowed to return to work for any amount of time on any shift pattern, as long as they still meet the 7 calendar day minimum claim period. As a result, you pay your employees for the hours that they work, but can continue to claim furlough pay for any hours that they do not work because of Covid-19. As this scheme is also ending, you need to take this into consideration when thinking about what happens after the end of flexible furlough for your business. Similarly to the UK furlough scheme, you may need to consider whether to bring your employee back to work full-time, part-time or whether to make them redundant if you cannot afford to pay them.
If you are self-employed and you believe that you have been impacted financially by Covid-19, you are able to claim a grant through the Self-Employment Income Support Scheme. Through the scheme, you can claim a grant that covers 80% of 3 months’ average trading profits up to £7,500. However, self-employed furlough is ending at the same time as the UK furlough scheme, so you need to think about what will happen after self-employed furlough ends. If you have not been able to financially recover from the impact of Covid-19, there is other government support available; you can read about what you can claim back in expenses if you are self-employed as this could save you money, and you can also check if you are eligible for Universal Credit.
When Does Furlough End?
As a business owner, you might be wondering ‘when does the furlough scheme end?’ as there have been several extensions to the scheme since its initiation in March 2020.
The furlough scheme is expected to end on the 30th September 2021. This is because the pandemic restrictions have been eased and more businesses have been able to open and trade as normal.
You can still claim furlough pay for your employees for September 2021 up until the 14th October 2021, however any amendments must be made by the 28th October 2021. Until this point, the government will pay 60% of wages up to a maximum of £1,875 per month, for the hours your employee is furloughed; you must then top up your employees’ wages to at least 80% of their wages, up to a maximum of £2,500 for hours not worked.
Find out more information on ‘when does the furlough scheme end?’ in our blog post ‘Prepare for the End of Furlough’.
You Can Get Legal Assistance from LawBite
As a business owner, LawBite can offer you legal advice on what happens after furlough ends. Our expert employment lawyers, solicitors, and mediators can provide clarification and assistance with your situation.
Read more about our expert Coronavirus legal advice and also our Covid-19 blog posts, including how to manage risk as your staff return to work.
Book a 15-minute consultation with one of our expert lawyers to discuss how LawBite can help you. Get in touch with us today by calling us on 020 38088314 or make an enquiry.
