The end of furlough: what you need to know
The Government’s furlough scheme comes to a close at the end of September 2021. It has undoubtedly been a lifeline for millions across the UK since it came into effect in March 2020 and, although the economy has now reopened, there are still employers and employees alike relying on furlough to keep them going.
When does the furlough scheme end?
The furlough scheme, also known as the Coronavirus Job Retention Scheme, officially comes to an end on 30th September 2021.
The scheme allowed employers to furlough employees (place them on a period of temporary leave), with the Government paying 80% of their wages. It saved many people from unemployment and businesses from going under, particularly those in the hospitality and retail industries who suffered huge losses during the various lockdowns.
The furlough scheme was originally due to end on 30th April 2021, however, it was extended as part of the 2021 Budget announcement and has been winding down since July 2021. The percentage paid by the Government decreased from July 2021 with a contribution of 70% up to a maximum of £2,187.50, and then reduced again to 60% up to a maximum of £1,875 during August and September.
Employers continued to pay National Insurance Contributions (NICs) and pension contributions for the hours their employee did not work.
What happens when furlough ends?
According to the BBC, 1.6 million people were on furlough at the end of July, so what happens to those still relying on it at the end of September?
With the economy now back open, many businesses will be able to welcome staff back and to wave goodbye to the furlough scheme. However, not all industries are thriving, with some restrictions still in place, and so some employers will no doubt face difficult decisions.
Some employers, especially those in industries still disrupted by coronavirus, such as travel, may find they simply cannot afford to keep employees on when the furlough scheme ends. As a result, unemployment is likely to rise in the UK.
It’s important that business owners get the redundancy process right. It’s one of the hardest parts of running a business, not to mention an emotional and stressful time for employees. As an employer, you must have a clear and robust strategy to help manage each stage of the redundancy process, including a fair consultation process, giving appropriate notice and working out compensation and/or settlement agreements.
It’s important to seek specialist legal advice when approaching the redundancy process, and our employment law solicitors can provide practical support to help employers with each step and to help avoid any claims for unfair dismissal.
Contact our employment law solicitors in Bristol
Whether you’re an employee facing redundancy, or you’re a business owner seeking practical advice on updating employment contracts or policies as you welcome staff back into the workplace, our employment law solicitors are here to help.