Ending of furlough: the end of employment for some?
Thursday 22nd July 2021
At the beginning of July 2021, the government’s contribution to furlough payments dropped while the requirement for an employer contribution was once again introduced. Prior to July 2021, the government paid 80% of employees’ wages whilst they were on furlough. There was no requirement for employers to ‘top up’. However, from 1st July the government contribution went down to 70%, meaning employers now have to make up the extra 10% themselves. From 1st August, this will drop to 60% with employers making up the extra 20%, before the scheme completely ends in September.
It is predicted that almost 500,000 workers will still be on furlough come September. This translates into an estimation that over 250,000 jobs could potentially disappear due to the continuing uncertainty of demand within different sectors as a result of the pandemic and the likely need for workforce restructuring. This would mean a rise in unemployment by as much as 273,000, leaving the rate of those without jobs at 5.5%, the highest it has been in 6 years.
Many employers are finding they do not have the capacity to simply ‘go back to normal’ and are therefore still relying on the Job Retention Scheme. If this is relevant to you, you need to prepare now that the Job Retention Scheme is coming to an end. It is important that you consider the options open to your business and to be proactive, and take advice on how to properly effect redundancies if these look to be necessary.
If you would like to discuss this further, then please contact one of our employment experts below. To view the full July Employment Law Update, click here: