Furlough pay changes: What you need to know

4 min Read Published: 28 Jun 2021

Furlough pay changes: What you need to knowThe government's Coronavirus Job Retention Scheme (CJRS) is changing from 1 July 2021, with the 11.5 million employees currently on furlough set to see changes to their monthly payments.

In this article, we explain how - and to what extent - the CJRS changes will affect you.

What is the furlough scheme?

The CJRS was introduced by the UK government during the first coronavirus lockdown in March 2020 to help support businesses and employees as the country went into its first nationwide lockdown.

The CJRS involved the temporary leave of employees whose wages were provided by a combination of contributions from the government and their employer. Since March 2020, the government has been subsidising 80% of all furloughed employees' monthly wages, with employers encouraged (but not legally required) to make up the remaining 20%. Employees are entitled to receive a minimum of 80% of their usual wage, capped at £2,500 per month, as part of the CJRS.

Throughout the pandemic, the CJRS has proved to be a lifeline for millions across the country who may have otherwise been made redundant or faced substantial losses to their income as a result of numerous lockdowns and coronavirus restrictions.

What are the changes to the furlough scheme?

From Wednesday 1 July 2021, the government will drop its furlough contributions from 80% to 70% (up to a maximum of £2,187.50 per month). Employers will then be legally obliged to provide the remaining 10% to ensure that all employees receive at least 80% of their usual monthly wage.

The CJRS will then begin to wind down incrementally, with government contributions dropping to 60% (up to a maximum of £1,875 per month) from Sunday 1 August 2021. The scheme will come to an end on Thursday 30 September 2021, when employers will be expected to return to pre-pandemic payments without government assistance.

Below is a table which outlines the changes to the CJRS:

May June July August September
Government contribution: 80% up to £2,500 80% up to £2,500 70% up to £2,187.50 60% up to £1,875 60% up to £1,875
Employer contribution: None None 10% up to £312.50 20% up to £625 20% up to £625
Employee receives: 80% up to £2,500 per month 80% up to £2,500 per month 80% up to £2,500 per month 80% up to £2,500 per month 80% up to £2,500 per month

How will the changes affect you?

In practice, not that much - for now. All employees on furlough are still required to receive a minimum of 80% of their wage, so even though the government is reducing its contribution to 70%, your employer should be making up the 10% difference by themselves from 1 July.

The only difference is that the monthly payment you receive will now be split between the government and your employer, rather than just the government itself.

This could, however, have some knock-on effects for employees in struggling businesses. As the CJRS winds down throughout the rest of the summer, employers will increasingly be responsible for paying employees' wages again, and there could be an increase in redundancies as firms unable to afford staff wages are forced to let them go. This may not happen for a few months until the government contributions completely cease from 30 September.