Furlough Scheme Extension Rules From July

Furlough Scheme Extension

The Government announced an extension of the furlough scheme on Friday 29th May 2020.

The furlough scheme also known as the job retention scheme is to be extended until the end of October.

The support provided by the government will gradually reduce from August. As a result employers will be required to contribute.

Furlough Scheme Extension Changes

Below is an illustration of how the Government support reduces each month.

Jul 2020

Furlough Scheme in July

No changes.
The Government pays 80% of wages up to the cap of £2,500.00.
The Government pays Ers NI and Ers Pension contributions.
Cost to Employer approx 0%

Jul 2020
Aug 2020

Furlough Scheme in August

The Government pays 80% of wages up to the cap of £2,500.00.
Employers must pay the Ers NI and Ers Pension contributions.
Cost to Employer approx 5%

Aug 2020
Sep 2020

Furlough Scheme in September

The Government contribution drops to 70% of wages up to a cap of £2,187.50.
Employers must make up the difference of 10%, this ensures the employee still receives 80%.
Employers must pay the Ers NI and Ers Pension contributions.
Cost to Employer approx 14%

Sep 2020
Oct 2020

Furlough Scheme in October

The Government contribution drops again to 60% of wages up to a cap of £1,875.00
Employers must make up the difference of 20%, this ensures the employee still receives 80%.
Employers must pay the Ers NI and Ers Pension contributions.
Cost to Employer approx 23%

Oct 2020
Nov 2020

Furlough Scheme Ends

From 1st November employers must pay their employees in the normal manner. Government support ends.

Nov 2020

Further announcements of the extension

The government also announced other changes to how the furlough scheme will change with the extension. These include flexible furloughing, closing the scheme to new employees and restricting the claim periods.

What is flexible furloughing?


One of the major disadvantages of the furlough scheme was that furloughed employees could not work any hours at all.

From 1st July, the scheme becomes more flexible for furloughed employees.

Employers can look to bring back employees to work some hours on a part time basis. The furlough scheme will still be available for these employees. As a result the employer would only need to cover the costs of the hours actually worked. The Government would continue to cover the shortfall to the employee.

We are awaiting details to how this will be calculated and how claims will be made for flexible furloughing. This is expected to be released on 12th June.

When does the furlough scheme close for new employees?


From 1st July the furlough scheme is only available to those employees who have already been furloughed.

Employees need to be furloughed for a minimum of 3 weeks to be eligible. As a result the important date to note is 10th June.

The 10th June is the final date that an employer can furlough an employee for the first time. Furlough commencing on this date ensures that the 3 week minimum period is completed by 30th June.

What changes will there be to the claim periods following the furlough scheme extension?


The furlough scheme extension announced significant changes to the monthly calculations. The government support provided will gradually reduce.

As a result from 1st July claims will no longer be able to overlap different months.

We understand that claims from this date will be made at a minimum on a weekly basis and at a maximum on a monthly basis.

Final point on the Furlough extension

The furlough scheme was set up as a temporary solution. It was to assist employers who had seen a significant drop in customer demand and to assist employees who couldn’t go to work.

The expectation over the next few months is that the furlough scheme will significantly reduce in scale.

More and more businesses are reopening. See our blog on which businesses can now open. As a result more and more furloughed employees will be expected to be back at work. Thus, resulting in a natural conclusion to the furlough scheme extension.

DISCLAIMER – Please note that the content contained in this article is for general information only and is not a substitute for professional advice – read our full disclaimer

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