As of July 1st, the rules around furlough will begin to change as the Chancellor looks to slowly draw back the scheme.

 

Around 5.1 million people were on furlough at its peak in January 2021, with hospitality, hotels and air transport amongst the most reliant industries. But while the scheme has been beneficial in reducing unemployment, it has also come at great cost to the state – an estimated £66 billion, to be precise.

 

So it comes as no surprise that, despite restrictions in England meaning many businesses still can’t operate normally, treasury sources have stated that Rishi Sunak will not be extending the scheme beyond September.

 

Here’s everything you need to know about the latest updates.

 

What is furlough?

 

Furlough – or the Coronavirus Job Retention Scheme, to give it its full name – was implemented way back in March 2020 when the UK entered its first lockdown (remember that?).

 

The scheme was created to prevent mass redundancies as the pandemic wreaked havoc across the UK, closing businesses and forcing us to stay away from workplaces.

 

After two extensions, the scheme will begin to draw to a close over the next three months, and finally end on September 30th.

 

How have the rules changed?

 

Until now, the rules around the scheme have remained unchanged – furloughed employees received 80 per cent of the salaries for hours not worked, with the Government contributing the full amount to ease the burden on employers and reduce job losses.

 

Now, while furlough remains unchanged for employees – they will still receive 80 per cent of wages until they return to work – business owners will now be asked to make a bigger contribution.

 

During the final months of the scheme, rules will be as follows:

 

  • From July 1st, Government will pay 70 per cent of a worker’s salary, and employers will be required to pay 10 per cent
  • From August 1st to September 30th, Government will pay 60 per cent and employers will be required to pay 20 per cent

 

All other requirements regarding eligibility, pension and National Insurance contributions remain unchanged.

 

What happens to staff currently on furlough?

 

In short – nothing!

 

Staff can remain on furlough until September 30th and will continue to receive 80 per cent of their wages for hours not worked, up to a maximum of £2,500 per month.

 

With Coronavirus restrictions set to end on July 19th, it is hoped that most businesses will be able to reopen and employers will be able to take furloughed workers back well before the scheme’s closing date.

 

Is there any alternative support available?

 

Panic ensued amongst many business owners when it was announced that furlough would be ending, but it’s important to know that there are still schemes available to help with reopening and aid recovery.

 

From growth funding and grants to apprenticeship schemes and recovery loans, you can learn all about the support on offer in our blog here.

 

To find out more about furlough and make a claim, visit the Gov.uk website here.