The beginning of the end for Furlough Leave

Covid 19

Advice | 1 July 2021

Today marks the commencement of the tapering of the Coronavirus Job Retention Scheme (the “CJRS”). The CJRS was introduced by the Government in April 2020 in response to the Covid-19 pandemic. Under the CJRS, all UK employers could claim a grant from HMRC to cover 80% of the wages costs of employees who were not working but retained on the company books (“furloughed”). This allowed businesses across many sectors to keep their employees in employment, when the alternative would have been to make their roles redundant due to the uncertain economic climate, and the impact that the Pandemic had had on organisations across the UK.

Since its introduction, the terms of the CJRS have varied, with flexible furlough being introduced in July 2020. This allowed employees to return to work on a part time basis, with employers paying employees in full for the days worked, whilst claiming under the CJRS for days not worked.

From 1 July 2021, the CJRS is beginning to taper, meaning that until the CJRS closes at the end of September, businesses will now be required to make an increased contribution to employees’ wages for the time that they are furloughed. From 1 July 2021, employers will be required to pay 10% towards the cost of unworked hours, with this contribution increasing to 20% for the months of August and September 2021.

Whilst a furloughed employee will still receive 80% of their wages (subject to a statutory cap of £2,500 per month) and therefore not be affected by the changes, the increased contribution that employers are required to make from 1 July 2021 could have an impact on whether employers are able to keep employees in employment. Employers may have to make roles redundant as a result of not being able to meet the financial contribution required by the CJRS, due to the ongoing downturn in business that many sectors, especially hospitality, are still experiencing.

Advice

If you are being made redundant, or if you are a business that requires redundancy advice or support with regard to changing terms and conditions of employment, our team of Employment Lawyers can help.

If you need assistance or advice on the contents of this article, please contact the Employment Team at Thackray Williams LLP 020 8290 0440.