The ongoing Coronavirus pandemic is continuing to cause hardship for charities and individuals alike. In a bid to provide additional much needed financial support, the Government has extended its package of economic support.
Arguably one of the most important interventions has been the Coronavirus Job Retention Scheme (CJRS), more commonly referred to as furlough.
First introduced a year ago, the scheme has provided an essential lifeline to employers, helping them shoulder the employment costs for employees who were unable to work or who work reduced hours due to the pandemic and its restrictions.
The furlough scheme had been due to end in spring 2021 but, to the relief of both charities and their employees alike, it has now been extended until the end of September this year.
The 80 per cent furlough grant, up to a maximum of £2,500 per employee each month, will continue, as before, until 30 June 2021.
To prevent an abrupt end to this financial lifeline, from 1 July 2021, the amount paid will be gradually reduced – meaning that employers will be expected to start making additional contributions. This gradual tapering means that, from July, Government support will be limited to 70 per cent, with the remaining 10 per cent provided by the employer.
Then, from 1 August until the end of the scheme on 30 September 2021, employers will be expected to contribute 20 per cent, with the Government covering the remaining 60 per cent.
In addition to the 10 per cent and 20 per cent contributions made in July, August and September, employers must continue to pay employers National Insurance and pension contributions on the full amount being paid to employees.
The hope is that by the summer, with the gradual reopening of the economy, many charities will have weathered the worst of the economic storm and be in a stronger financial position.
However, the reality is that some charities may need to consider restructuring to protect the long-term future of their companies. If redundancies are necessary, it is important to build in sufficient time for consultation with workers who will be affected, so preparations will need to start now.
If you are struggling to understand the new rules relating to furlough, please get in touch and the team at Thomas Coombs will be happy to help.