With the coronavirus job retention scheme (aka the 'furlough scheme') coming to an end on the 30th September 2021, the point has now been reached at which employers now have to make a contribution towards the salaries of their furloughed staff of 10% in July 2021. The employers contribution will increase to 20% for the final 2 months of the coronavirus job retention scheme.
Furlough Scheme
The decision to extend the furlough scheme until the 30th September 2021 was made by the Chancellor of the Exchequer, Rishi Sunak, in his budget on the 3rd March 2021. However, when that decision was made, it was also made clear that employers would have to start sharing the costs from the 1st July 2021, to be phased in, in 3 stages, as follows:-
- Up to the 30th June 2021, the Government provides the employer with a grant under which 80% of furloughed employees’ wages are paid, up to a maximum of £2,500.00 per employee per month, but with employers required to pay the national insurance and employers pension contributions.
- From the 1st July 2021, the taxpayers contribution will fall to 70% of employees wages, with the employers contribution set at 10% plus payment of national insurance and employers pension contributions
- From the 1st August 2021 until the end of the furlough scheme on the 30th September 2021, the taxpayers contribution will fall to 60%, with the employers contribution rising to 20% plus payment of national insurance and employers pension contributions
Calls To Extend The Furlough Scheme For Travel Sector
Some have called for an extension of the furlough scheme beyond the 30th September 2021, until March 2022, for the travel sector, which has been severely impacted by travel restrictions which are likely to remain for some time to come. Seventy seven MP's have signed a letter calling for such an extension.
In their letter, the 77 MP's state: "With a lost summer season coming on top of the worst fifteen months in the history of UK aviation, without continuing support though the Coronavirus Job Retention Scheme, the risk of significant redundancies will become a stark and devastating reality. We urge you to not only extend the scheme but to work with the industry to provide further much needed financial support."
A Full Extension Ruled Out
During Prime Ministers Questions (PMQ's) on the 30th June 2021, the Prime Minister, Boris Johnson, firmly ruled out a full extension of the furlough scheme.
During the said PMQ's, SNP MP Dr Philippa Whitford asked: "Due to his failure to maintain strict border quarantine and the delay in adding India to the red list, cases of the Delta variant are surging across the UK. As well as a marked regional variation, the biggest ongoing impact is on sectors such as hospitality, entertainment and aviation. So rather than starting to reduce financial support from tomorrow, will the Prime Minister agree to extend full furlough and business support beyond September, particularly for those geographical areas and businesses which are most affected?"
In response to this question, the Prime Minister ruled out an extension of the furlough scheme. He said: "No because although the Delta variant is indeed seeded and growing in at least 74 countries around the world, including this one, this is the only country or the country where the protection by immunity against the Delta variant is the highest and the strongest. And that's why we're going to continue with our cautious but irreversible road map and I hope it will command her support."
As for the travel sector and whether the furlough scheme would be extended for it, a Government representative stated that the sector would "continue to benefit from a reduced rate of VAT until March 2022 and can continue to access the Recovery Loan Scheme." That would indicate that the Government is unlikely to make the travel industry a special exception.
