In today’s budget announcement, Chancellor Rishi Sunak announced that the Coronavirus Job Retention Scheme (CJRS) is to be extended until September 2021. This means that by the time the CJRS ends at the end of September, the concept of “furlough” will have been with us for over 18 months, even though it did not even exist in the UK this time last year.
At present, employers are able to furlough employees and apply for a grant under the CJRS to cover monthly wage costs for employees who are unable to work because of the impact of coronavirus for up to a maximum of £2,500 per month. This includes ‘flexible furlough’ whereby employers can furlough employees flexibly for any amount of time, and claim a grant under the CJRS for the hours not worked as a result of the pandemic.
The CJRS was previously set to remain open until 30 April 2021 (having previously been extended on multiple occasions). This has now been extended to the end of September 2021.
Under the CJRS rules as they currently stand, employers are only required to contribute by way of covering the cost of national insurance and pension contributions. However, as part of the plan to reopen the economy, the Chancellor has announced that employers are, once again, expected to contribute towards the costs of furlough from July 2021. Employers are required to contribute 10% from July, rising to 20% in August and September. Employees will be entitled to furlough pay for any hours not worked at a rate of 80% (up to a maximum of £2,500 per month) until the scheme ends.
Other relevant announcements affecting employers include the increase to the national living wage which will increase to £8.91 per hour from 1 April 2021 with the age threshold also being lowered from 25 to 23. This will equate to an annual increase of almost £350 for a full-time worker on the national living wage. The Chancellor also confirmed that income tax bands will be frozen at £12,570 for basic rate contributors (and £50,270 for higher rate) until 2026.
Further, with the extension of the furlough scheme, today’s announcement also reported the launch of a £100million major fraud task force to combat fraudulent claims under the CJRS.
For further advice on any of the changes outlined above or on Covid-19 Coronavirus related employment queries, please contact our Employment and HR Services team.