Rishi Sunak has announced, in the budget plan, that the furlough scheme has been extended to the end of September.
Paul Burton looks at the changes to furlough and what the extension means for employers and the self-employed.
Has furlough been extended?
Furlough was set to run until April this year, however it has now been extended until late September.
The furlough job retention scheme was first put in place in March 2020, with the aim to prevent mass job loss. The scheme pays 80% of employees’ wages while they cannot work due to the pandemic; and has protected over 11 million jobs so far.
What was announced in the budget?
The Chancellor has set out a three-point plan which aims to rebuild the economy, ‘fix’ public finances and support people in the coming months.
Ahead of his statement to the Commons, Mr Sunak said: “There is now light at the end of the tunnel with a roadmap for reopening, it’s only right that we continue to help business and individuals through the challenging months ahead.”
Have there been changes to furlough?
For employees there have been no change, employees will continue to receive 80% of their salary for hours they haven’t worked until the scheme ends.
As for employers, there have been changes; you can read about this below.
What does the furlough extension mean for employers?
With the idea of ‘re-building the economy’ in mind, employers will be expected to pay a percentage towards the hours that their staff don’t work; starting July. The rate will begin at 10% and increase to 20% during August and September, as the economy starts to reopen again.
The scheme is being ‘tapered off’ in such a way with the aim to prevent employers suddenly being thrown in the deep-end of employment salaries.
These employer contributions will presumably end after September, but this is yet to be confirmed. It is worth noting that the scheme has been extended 3 times already.
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