When does furlough scheme end in 2021? What is furlough?

Support for employees placed on furlough by businesses to cope with the financial toll of the pandemic is to be gradually phased out soon.

As Covid-19 restrictions continue to be eased amid growing case numbers and fears over the Delta variant’s rapid rise across the UK, a number of UK Government support schemes are preparing to be wound down – with furlough included among them.

Furlough became a staple of the pandemic’s devastating economic impact on businesses in the UK and worldwide, as many found themselves unable to afford to keep staff on full-time when lockdown commenced.

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Recent data has shown that 2.4 million people remain furloughed or flexi-furloughed across the UK, which is a far cry from the height of the pandemic last year when the figure was closer to 10 million people.

Furlough: When does furlough scheme end in 2021? What is furlough? (Image credit: Stefan Rousseau/PA Wire)
Furlough: When does furlough scheme end in 2021? What is furlough? (Image credit: Stefan Rousseau/PA Wire)

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While recent signs of economic recovery have helped buoy businesses as restrictions ease, any potential re-imposition on trading or travel restrictions could leave employers struggling as furlough is phased out.

For now though, here’s everything you need to know about what furlough is and when it is due to end in the UK.

What does furlough mean?

The UK Government created the furlough scheme last year as part of its coronavirus support package to help bring stability to the country amid its economic crisis.

To mitigate the economic downturn deepened by businesses unable to trade and forced to make job cuts or redundancies, furlough was created as a way to keep staff in their jobs by taking time off or working less hours.

Unlike working from home, the majority of furloughed workers would not receive any work but have 80% of their monthly wage or salary at £2,500 or less paid by their employer in order to keep them on – with the company then claiming this back from the government.

This will remain the same under new rules, with furloughed workers on a salary of £2,187.50 or less still seeing 80% of their wages.

But there will be some changes for employers as the UK Government prepares to phase out the Coronavirus Job Retention Scheme.

Who can make a furlough claim?

The furlough scheme is open to small and large employers who can claim furlough on their workers’ behalf – individual staff members cannot make a claim themselves.

An employer is able to choose the hours and work patterns of an employee’s furlough, but cannot ask an employee to perform any work which would make money or provide services for the company or affiliated organisation within furloughed work periods.

When will the UK furlough scheme end?

After multiple extensions to the furlough, most recently extended in Chancellor Rishi Sunak’s March 2021 Budget, it is expected that furlough will end at the end of September.

But it is starting to be phased out from today (July 1) as new furlough rules dictate that employers must contribute 10% of furloughed workers wages, with the government reducing the amount it will contribute and subsidise to 70%.

The 10% decrease in furlough support from the government and additional pressure on employers to pay up is prompting fears for many – particularly for workers in the types of venues and businesses which have not been allowed to reopen under Level Two restrictions, such as nightclubs and soft play centres.

At the start of August, this amount will be staggered down another 10%, with the government only contributing 60% of monthly wages up to £1,875.

Employers from August 1 onwards will have to contribute 20% of their furloughed employee’s wages under the changes.

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