September is the final month of the furlough scheme, subject to any last-minute extension. It was introduced in March 2020 as a short-term measure to support employers in paying their staff during the coronavirus pandemic and was originally due to last for three months.
There have been several extensions made to the furlough scheme and in the March 2021 Budget the furlough scheme was extended to 30 September 2021. The length of this extension was a surprise to many, and most commentators were expecting an extension to the end of June 2021. For months, many leading organisations such as the CBI, TUC, CIPD and British Chamber of Commerce had asked for the furlough scheme to be extended and the length of the extension requested varied from a few months to the end of the year. The Budget confirmation that the furlough scheme would be extended to 30 September 2021 provided some certainty for many employers and their staff.
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How many employers are still using the furlough scheme?
Latest official figures for the furlough scheme (updated on 2 August 2021) show that, as at 30 June 2021, there were 540,000 employers with 1.9 million staff on furlough. On 31 May 2021, the figure was 2.4 million. Since the start of the furlough scheme a total of 11.6 million jobs were put on furlough for at least part of the duration of the scheme.
Some of the sectors with the highest rates of jobs currently furloughed are passenger air transport, travel agency and tour operator activities and photographic, creative, arts and entertainment activities. At the moment, London has the highest level of staff on furlough.
What do businesses need to be aware of in these final weeks?
Regarding the practical issues for employers, from 1 July 2021, the Government paid 70% of wages up to a maximum cap of £2,187.50 for the hours the employee is on furlough. Employers had to top up employees’ wages so that they received 80% of their wages (up to £2,500) for the hours they are on furlough. The caps are proportional to the hours not worked.
From 1 August 2021, the Government paid 60% of wages up to a maximum cap of £1,875 for the hours the employee is on furlough.
It is important to be aware of the dates for making claims for payments:
- Claims for furlough days in August 2021 have to be made by 14 September 2021.
- Claims for furlough days in September 2021 must be made by 14 October 2021 and any amendments must be made by 28 October 2021.
Announcing the September extension, the Chancellor said “there’s now light at the end of the tunnel with a roadmap for reopening, so it’s only right that we continue to help business and individuals through the challenging months ahead – and beyond.”
However, the Budget announcement was not the only recent development in relation to the furlough scheme. Furlough fraud has been a concern from the outset and, in the last few weeks, we have had the first Employment Tribunal decisions relating to the furlough scheme in the context of redundancy and unfair dismissal.
HMRC has stated that over £1 billion of fraudulent or mistakenly claimed furlough funds is set to be recovered over the next two years.
It is reported that more than 91,000 calls have been made to the HMRC fraud hotline during the first nine months of the pandemic with many of these relating to furlough fraud. The first arrests for furlough fraud have already been made.
Furlough fraud is described by Protect, the whistleblowing charity previously known as Public Concern at Work, as the fastest emerging issue it has dealt with in its history. Key fraudulent activity includes organisations telling furloughed staff to continue to work or claiming for working members of staff without their knowledge.
Take a look at our blog post to know what you need to prepare and make sure that you are ready should HMRC pay a visit.