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Furlough scheme extended until the end of September 2021

BY Heather Maclean
Employment Law & HR

In today’s Budget, Chancellor Rishi Sunak has confirmed that the furlough scheme, which was due to end on 30th April 2021, will now be extended until the end of September 2021. The scheme has been extended several times since its introduction in March 2020.


What does the grant cover and how much do employers have to contribute?

  • Employees will continue to be entitled to receive 80% of their wages (subject to a cap of £2,500 per month) and may be continuously furloughed or placed on flexible furlough (working for part of their normal hours).
  • Until July there will be no employer contribution to wages, other than employer National Insurance contributions and minimum auto-enrolment pension contributions (typically amounting to 5% of employment costs).
  • In July, employers will have to contribute 10% of furlough wages (plus NI and pension), with the Government’s grant covering 90%.
  • In August and September, employers will have to contribute 20% of furlough wages (plus NI and pension), with the Government’s grant covering 80%.


Retention incentives

In Autumn 2020, the Government announced that it would scrap the Job Retention Scheme Bonus, which was due to be paid in January 2021. The Bonus was to comprise £1,000 for each employee who had been on furlough and who was retained by their employer. Instead, the Government indicated that would put in place an alternative retention incentive. However, the Budget did not contain any details of further retention incentives, and it looks unlikely that any new scheme will be forthcoming. 


Other employment law announcements

  • The National Living Wage will rise this April from £8.72 to £8.91 for those aged 23 and over (prior to April 2021 the higher rate is only available to those 25 and over).
  • Income tax and NI rates will not be changed. Personal allowance thresholds will rise in April, but will then be frozen until 2026.
  • A new HMRC taskforce will be set up to combat furlough scheme fraud.
  • In August 2020, the Chancellor introduced financial incentives for employers taking on apprentices, offering a grant of £2,000 per apprentice aged 16 to 24, and £1,500 per apprentice aged 25 and over. This scheme was due to end in March, but has now been extended to the end of September. Further, from April the level of grant will be increased to £3,000 per apprentice, regardless of age.
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