As the 1st July 2021 approaches, the government grant is being reduced to 70% of the furloughed employees’ wage costs for their unworked hours. The employee will be entitled to 80% of their wages but the employer is required to contribute 10% along with the employer’s NIC and pension contributions. This will be reduced further from 1st August to 60% government contribution and 20% employer contribution along with the employer’s NIC and pension contributions.
A cap of £2,500 per month on furlough pay remains so the government contribution in July will be limited to £2,187.50 and in August will be £1,875 with the remainder being paid by the employer.
This additional cost may mean that some employers can no longer keep their employees on furlough, employers should ensure they have reviewed their financial situation and necessary cash flows to determine the best course of action.
Key Considerations for Employers
As business returns to some level of normality, employers will need to review their structure and perhaps consider some of the following:
- Whether it will be possible/practical to return all staff to the premises, consider homeworking for some/all staff or perhaps a blended approach. Employers should ensure that they are fair in their decisions, ensuring that all staff are treated with respect and without any form of discrimination.
- Whether some staff could be redeployed to different departments or areas within the business.
- Whether Lay-offs or Short time working is an option (this will only be possible where the required clause was included in the employees’ contracts).
- As a last resort, employers may have to consider redundancy, but we would recommend getting professional advice in this area if it is to be considered.
- When staff are returning to work after prolonged absence, employers may want to consider training to ensure that their staff are supported in their return to work.
- All paperwork should be kept to ensure compliance with the legislation surrounding the furlough scheme.
Should you require any further information or clarification on the arrangements for furlough going forward, please do not hesitate to contact the office on 028 9181 3295.