A number of employment related announcements were made in today’s budget. These included:-
- An extension to the furlough scheme and changes to qualification for claims after 1st May 2021 (see highlighted text below)
- An increase in the national living wage in April 2021 from £8.72 to £8.91
- An increase in the apprenticeship incentive payment to £3,000
Extension to furlough scheme
As anticipated, the scheme will now end on 30th September 2021.
Whilst employees will continue to be entitled to be paid 80% of their salary for hours when they are designated as furloughed (subject to the cap of £2,500), employers will need to make increased contributions.
Currently, employers are required to pay pension contributions and NI contributions but, from July these financial contributions will increase:-
- From 1st July 2021, employers will be also required to contribute 10% of salary for hours when the employee is designated as furlough, with only 70% reclaimable through the furlough scheme
- From 1st August 2021, employers will be required to contribute 20% of salary for hours when the employee is designated as furlough, with only 60% reclaimable through the furlough scheme
For claims up to 30th April 2021, an employee is only eligible if they were employed on or before 30 October 2020 and the employer had made a PAYE Real Time Information submission to HMRC between 20 March 2020 and 30 October 2020.
For periods after 1st May 2021, an employee is eligible if they were employed on 2nd March 2021 and the employer had made a PAYE Real Time Information submission to HMRC between 20th March 2020 and 2nd March 2021
It is expected that the remaining rules of the scheme will be unchanged. As such:-
Key points are:-
- Full-time, part-time, agency, flexible and zero-hour employees are all eligible, provided that the reason they cannot work is covid-19 related
- Any employees who are extremely clinically vulnerable and have been advised to shield are eligible, regardless of whether there is a business reason to furlough them -this includes the additional 1.7m who received letters recently
- Employees who are unable to work, including from home, due to caring responsibilities arising from coronavirus, such as caring for children who are at home as a result of school and childcare facilities closing, are eligible regardless of whether there is a business reason to furlough. (As schools start to open to children, I expect the number of employees eligible under this provision will reduce).
- From 1st December 2020, employees are not eligible to be furloughed during any period of statutory or contractual notice
- Furlough is not to be used to cover periods of pre-booked holiday where the employees would otherwise be in work
- I believe that the scheme cannot be used to cover employees who are sick or self-isolating due to COVID-19 – in such cases there is an entitlement to SSP
- From 10th December 2020 employees on long term sick have no longer been eligible (unless they would have been furloughed for business reasons)
Although this extension is likely to save a number of jobs, for many others it is just delaying the inevitable. As case numbers decrease, and workplaces start to reopen to employees, I suspect businesses will start planning for the future.
As always, if you have any queries, please do not hesitate to contact me.
Pillinger & Associates Solicitors
T: 01789 336957 / 07764 764806