The Coronavirus Job Retention Scheme (Furlough) has changed

Despite ‘Freedom Day’ being on the horizon, The Coronavirus Job Retention Scheme (CJRS) continues to support many businesses and will do so until it ends in September.


The scheme was extended earlier this year in the spring budget but will be withdrawn in stages over the next three months.


The withdrawal of this scheme could have a substantial financial impact on businesses who are still reliant on the support offered. For that reason, they must be prepared for the changes ahead.


As with the existing scheme, furloughed employees will continue to receive 80 per cent of their usual wages capped at £2,500 a month, or equivalent weekly or daily figures, for usual hours not worked right up until the scheme ends later this year.



The first major change came in from 1st July which meant employers must make a 10 per cent contribution to these costs, as the Government grant will only cover 70 per cent of the costs (capped at £2,187.50). To clarify, the employee will still receive 80% but only 7/8ths will be covered by Government, the remaining 1/8th will be covered by the employer.


In August and September, the Government grant will then drop again to 60 per cent (capped at £1,875), meaning that employers must make a 20 per cent contribution to the amount paid to employees, making them liable for a quarter of the furlough cost.


The calculation of usual wages is still based on the last pay period before the employee became eligible for furlough.



Due to the scheme being made available for longer than initially anticipated, there are various dates on which an employee had to be reported to HMRC. The calculation of usual wages depends on whether the employee was reported on or before 19 March 2020, 30 October 2020 or 2 March 2021.


Any pay rises since an employee’s reference date are not taken into account for any time they are furloughed.


Due to the funding becoming increasingly limited in comparison to the past 15 months, now is a crucial time for employers to assess whether they will continue to support furloughed employees going forward, especially if they are considering making redundancies as a result of the withdrawal of funding.


Employers must be mindful that redundancies could come with costs too and be aware of their obligations. In addition, they may be required to report redundancies to the Secretary of State for Business, Energy and Industrial Strategy either 30 or 45 days in advance of dismissing employees, depending on the number of redundancies they intend to make.


If you need any further information or help planning for the changes please contact us on 01482888820