Managing the end of furlough

In the Budget of March 2021, the Coronavirus Job Retention Scheme was extended to 30 September 2021.

Many UK businesses have used the Government’s Coronavirus Job Retention Scheme to protect workers’ jobs during the coronavirus pandemic.

The Government created the Coronavirus Job Retention Scheme – commonly referred to as the furlough scheme – to protect workers’ jobs during the COVID-19 shutdowns. Rather than have to make redundancies, employers can place their staff on temporary leave – known as furlough – and have the scheme cover part of each worker’s pay while topping up the rest themselves.

The scheme was due to end on 31 October 2020, to be replaced by a new Job Support Scheme. However, the Government postponed the Job Support Scheme and has now extended the Coronavirus Job Retention Scheme (CJRS) to 30 September 2021.

We've outlined conditions for the furlough scheme below. For guidance on how to claim, visit GOV.UKLink opens in a new window.

Furlough up to the end of June 2021

The extended furlough scheme will operate as outlined below, with businesses being paid upfront to cover salaries. The extension of the scheme applies UK-wide.

  • The Government will pay 80% of an employee's wages (up to a limit of £2,500 per month) for hours not worked.
  • Employers will pay employer National Insurance contributions and pension contributions only for the hours the employee doesn't work.
  • As before, businesses can choose whether to bring furloughed employees back to work part-time or furlough them full-time.
  • You do not need to have previously claimed for an employee before 30 October 2020 to claim for periods from 1 November 2020.

 

Furlough from July 2021

Details of how the furlough scheme will change from July 2021 are as follows:

  • From July 2021, the Government’s contribution will gradually reduce, with employers asked to contribute more (see below). Employees, however, will continue to receive 80% of their wages (up to a limit of £2,500 per month).
  • The Government will pay 80% of an employee's wages (up to a limit of £2,500 per month) for hours not worked until 30 June 2021.
  • From July 2021, the Government will pay 70% of an employee’s wages (up to a limit of £2,187.50 per month), with employers expected to pay the remaining 10% (up to £312.50 per month).
  • Then, in August and September 2021, the Government will pay 60% (up to £1,875 per month) and employers will have to pay 20% (up to £625 per month).
  • Employers will pay employer National Insurance contributions and pension contributions only for the hours the employee doesn't work.

As of July 2021, the Self-Employment Income Support Scheme (SEISS) continues with a fifth grant.

The details of SEISS are set out in full on GOV.UKLink opens in a new window. However, the key information is as follows:

  • The Government widened its eligibility criteria for the fourth SEISS grant. While previously you must have filed a tax return for 2018–2019 to apply, you may now be eligible if you have filed a 2019–2020 return.
  • A fifth SEISS grant is available, covering May to September 2021. The value of the grant will be determined by a turnover test. If your turnover has fallen by 30% or more, you’ll continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500 (in total). If your turnover has fallen by less than 30%, you’ll receive a 30% grant of three months’ average trading profits, capped at £2,850 (in total). You can claim the final grant from late July 2021, and you must make your claim on or before 30 September 2021.

The Government is providing additional funding worth £4.6 billion across the UK to support businesses during the national lockdown that began in January 2021.

All businesses in England which are legally required to close as a result of this lockdown will receive one-off grants of up to £9,000.

Read more about the additional lockdown grantsLink opens in a new window

Businesses that must close due to national or local restrictions will receive a support grant of up to £3,000 per month.

You can apply for a grant if your business is either:

  • in an area of local Tier 2 or Tier 3 restrictions and has been required to close because of local restrictions that resulted in a first full day of closure on or after 9 September 2020
  • in an area of local Tier 4 restrictions and has been required to close because of local restrictions that resulted in a first full day of closure on or after 19 December 2020

The grants will be administered by local authorities, who may determine precise eligibility criteriaLink opens in a new window for their local areas.

Read more about the Local Restrictions Support Grant for closed businessesLink opens in a new window and the Local Restrictions Support Grant for open businessesLink opens in a new window

The Government is also providing all local authorities in England with an additional £500 million of discretionary business grant funding. This extra support comes on top of the existing Local Restrictions Support Grant for closed businesses.

Update (5 March 2021): The Job Support Scheme (JSS) was due to replace the Job Retention Scheme on 1 November 2020. However, because the Government has extended the Job Retention Scheme to 30 September 2021, the new JSS is now postponed.

Learn more about the proposed Job Support SchemeLink opens in a new window

You might already have some staff on flexible furlough and back in the workplace working part-time. As you begin to manage your employees’ full-time return to work, it’s helpful to consider:

  • which employees you’ll bring back, and under what type of working arrangements
  • how you’ll notify workers of their return
  • what you’ll do for employees who might not be able to come back (for example, if they’re vulnerable to COVID-19)
  • whether you’ll need to make redundancies

Deciding which employees to bring back

The impact of COVID-19 on your business may mean you have to change how you operate.

Not only must you make your workplace COVID-secure, but financially you might not be in a position to employ a full-strength workforce. In this case, you’ll need to decide which employees to bring back, and under what kind of working arrangements.

When you’re making these decisions, you must act fairly, to make sure you aren’t discriminating against anyone or contributing to what could be seen as constructive dismissal.

Find answers to questions about how to be fair when bringing staff back from furlough (CIPD)Link opens in a new window

Giving employees notice that furlough is ending

There isn’t a set notice period you have to allow, as staff should be available to return straight away. However, it’s a good idea to discuss your plans with them as early as possible before confirming anything, and find out whether they have any concerns about coming back. That way, you can address the issues and make the return as straightforward as possible.

When notifying your employees of their return to work after furlough, it’s best to do this in writing.

View an example of a letter template to download for informing employees about the end of furlough (ACAS)Link opens in a new window

Arrangements for employees who might be at risk

You may have staff who are particularly vulnerable to COVID-19 and apprehensive about coming back to work. If this is the case, you can choose to extend their furlough or make arrangements for them to return (if they aren’t required to shield according to government adviceLink opens in a new window).

Part of managing employees’ return to work will involve doing a risk assessment to make sure your workplace is COVID-secure. With vulnerable employees, you might need to conduct further assessments to identify specific risks and ways to protect those workers from harm.

Another part of the return-to-work process is discussing with furloughed employees what you’re doing to safeguard their health, safety and wellbeing and what adjustments you can make to help them settle back in.

Read advice on bringing employees back from furlough leave (FSB)Link opens in a new window

Making furloughed employees redundant

If the pandemic has had such a severe effect on your business that you have no option but to make redundancies, you can do this at any point during either the Coronavirus Job Retention SchemeLink opens in a new window or the Job Support SchemeLink opens in a new window (when it opens).

Redundancies are very difficult for everyone involved, and it’s important to navigate the process in a fair and legal way. When working out redundancy pay, you should base your calculation on an employee’s full contractual wage (i.e. before any reductions agreed under either the Coronavirus Job Retention Scheme or the Job Support Scheme).

Getting your redundancy process right is vital, and it’s advised that you seek legal advice before you take any action.

Read our guide to managing staff redundancies

Regional support

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Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.