Furlough scheme 2021 – will it be extended and when does it end?

THE Government’s furlough scheme is set to be extended until September this year.

The Chancellor is expected to unveil the plans to pro-long the coronavirus job support scheme in the Budget this afternoon.

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Chancellor Rishi Sunak first announced the furlough scheme in March 2020Credit: Getty – Pool

The scheme pays workers 80% of wages for hours not worked supporting many millions of workers during the Covid crisis.

Here, we explain all you need to know about the furlough scheme.

When does the furlough scheme end?

The Sun today revealed the Chancellor will announce an extension to the furlough scheme later today in his Budget.

It’s hoped the Government’s wage support will help firms get back on their feet after lockdown eases.

However, from July employers will be asked to start chipping in from July in the hope of avoiding mass lay-offs.

Businesses will have to contribute 10% of the cost, increasing to 20% in August and September as the economy reopens, according to reports.

The Coronavirus Job Retention Scheme has protected more than 11 million jobs since its creation last March, with Mr Sunak promising further help in the “challenging months ahead – and beyond”.

The Prime Minister hinted that furlough will be extended when setting out his roadmap out of lockdown.

The furlough scheme has been extended a number of times already.

The Chancellor first announced the support on March 20, 2020 at the height of the pandemic, and said it would only last until May 31, 2020.

It was then extended to October, and when this deadline approached, was extended again until December before being extended into Spring 2021.

In December last year, the Chancellor said: “Our package of support for businesses and workers continues to be one of the most generous and effective in the world.

“We know the premium businesses place on certainty, so it is right that we enable them to plan ahead regardless of the path the virus takes.

“We’re providing certainty and clarity by extending this support, as well as implementing our Plan for Jobs.”

How has the furlough scheme changed and will it be extended again?

Under current furlough rules, employees get up to 80% of wages paid for hours not worked, up to a maximum of £2,500.

It’s not clear if any of these conditions are set to change. Further details are expected in the Budget.

At the moment, employers are still able to choose to top up employee wages above the scheme grant at their own expense – but they don’t have to.

Workers also get their usual full salary for any hours they do work.

For hours not worked, employers will have to cover National Insurance and pension contributions.

The government was initially supposed to review furlough in January, but Mr Sunak brought his decision forward to give businesses certainty going into New Year.

It came ahead of the third national lockdown in England, which the country continues to follow.

The furlough scheme is being extended once againCredit: Getty Images – Getty

Who is eligible for the furlough extension?

The Government said in December the eligibility criteria for the furlough scheme extension until the end of April will remain the same.

The scheme remains open to any UK organisation with employees, including businesses, charities, recruitment agencies and public authorities, providing they have a UK bank accounts and UK PAYE schemes.

Workers can be on any type of contract, meaning you could still be furloughed if you are part-time or a contract worker.

And like last time, it is down to the organisation to arrange the help, rather than the employees.

The previous rules meant businesses are allowed to bring back furloughed employees on a part-time basis, although the government hasn’t confirmed if this is the case for the April 2021 deadline.

Workers must have been on payroll before October 30 to get furlough.

Can I be made redundant if I’m on furlough?

EVEN though furlough is designed to keep workers employed, unfortunately it doesn’t protect you from being made redundant.

But it doesn’t affect your redundancy pay rights if you are let go from your job amid the coronavirus crisis.

Your employer should still carry out a fair redundancy process.

You will be entitled to be consulted on the redundancy lay-off first and to receive a statutory redundancy payment, as long as you’ve been working somewhere for at least two years.

How much you’re entitled to depends on your age and length of service, although this is capped at 20 years. You’ll get:

Half a week’s pay for each full year you were under 22,
One week’s pay for each full year you were 22 or older, but under 41,
One and half week’s pay for each full year you were 41 or older.

Sadly, you won’t be entitled to a payout if you’ve been working for your employer for fewer than two years.

There should be a period of collective consultation as well as time for individual ones if your employer wants to make 20 or more employees redundant within 90 days or each other.

You are also entitled to appeal the decision by claiming unfair dismissal within three months of being let go.

If you’re made redundant after your company has gone into administration you can claim redundancy pay via Gov.uk.

Large companies (with more than 250 employees) have to meet a financial impact test, as part of current rules.

It means the scheme is only available to those whose turnover has stayed the same or is lower than before Covid-19.

There is no financial impact test for SMEs or charities.

If you’re self-employed, is also set to announce the details of the fourth instalment of the support scheme.

What is happening to the Job Support Scheme?

The Job Support Scheme (JSS) was set to replace furlough and run for six months from the start of November 2020 to the end of April 2021

It’s not clear yet what will happen with JSS, announced in October, and if it will be available after the furlough scheme ends.

The scheme aims to continue to support businesses and their employees facing coronavirus-related woes, and was expected to come into effect in December.

The Chancellor hoped the JSS extension would reduce the millions of job losses expected when furlough ends.

But rising cases of coronavirus, another lockdown and a troubling economic outlook led Mr Sunak to continue the furlough scheme.

Under the JSS, employees could work one day a week and earn up to 73% of their wages.

It was designed to help employees working for businesses that have shut down in areas put under previous Tier 2 and Tier 3 restrictions.

Employees on the scheme would have needed to have worked a minimum of 33% of their hours to be eligible, and businesses must contribute a third of wages.