Key facts about the extended Job Retention Scheme (furlough scheme)

Key facts about the extended Job Retention Scheme (furlough scheme)

Key facts about the extended Job Retention Scheme (furlough scheme)

Posted: 26/03/2021

In his Budget 2021 speech, the Chancellor announced that the furlough scheme would be extended once more until 30 September 2021. This will be welcome news to the many businesses who have claimed support under the scheme to pay their staff and protect jobs. Here is an up-to-date summary of the extended scheme.

Features of the current furlough scheme

The current scheme allows an employer to place an employee on furlough and apply for a grant to cover wage costs for the time an employee is on furlough. The employer:

  • can claim 80% of ‘usual salary’ for hours not worked, up to a maximum of £2,500 per employee (pro-rated for hours not worked) per month
  • needs to fund employer National Insurance contributions (NICs) and the minimum employer automatic enrolment pension contributions.

The level of grant available to employers will stay the same (80%) until 30 June 2021.

From 1 July 2021, the level of grant will be reduced. To be eligible for the grant, an employer must ‘top up’ the grant to ensure furloughed employees receive 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough.

The level of the grant will reduce as follows:

  • For July 2021 – an employer can claim 70% of furloughed wages up to a maximum of £2187.50 and
  • For August and September 2021 – an employer can claim 60% of furloughed wages up to a maximum of £1,875.00.

Employers will need to continue to fund employer NICs and mandatory minimum automatic enrolment pension contributions.

A change to who is eligible to be furloughed

The Chancellor has also extended eligibility for the scheme. For periods starting on or after 1 May 2021, employers can claim for employees who were employed on 2 March 2021, as long as a PAYE Real Time Information (RTI) submission was made between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee.