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The Furlough Scheme is ending. What happens next?

Throughout the COVID-19 pandemic, the Government has provided financial support to employers in the form of the Coronavirus Job Retention Scheme, commonly known as the Furlough Scheme. The Scheme was updated, changed and extended on numerous occasions but it seems that it will end for good on 30 September 2021, having undergone a ‘winding down’ process since July 2021.

According to the latest reports from the BBC, there were around 1.9 million members of staff still operating on the Furlough Scheme as of 30 June 2021. Although this looks a high number, it is significantly less than the peak of 5.1 million in January 2021. For those still on the Scheme and for the employers functioning under it, what will happen when it ends?

Staff are retained

Businesses may well retain staff, integrating them back into the business as the UK economy continues to recover and returns to full trading. For the first time since March 2020, it is a viable option to have staff back fulltime, whilst using the Scheme to assist the transition. A key indicator as to whether businesses use this option will be the rate of those on furlough through July and August 2021, which will be published in a month or so.

Staff are made redundant 

Many employee may lose their job through redundancy. Any decision to do so should be undertaking carefully, in particular given the need to follow a fair and reasonable procedure. Nevertheless, numerous employers will have planned for the end of the Scheme, with any revised workforce structure in place prior to September. Redundancies may not be as high as once feared, a theory which is supported by the Bank of England and the Office for Budget Responsibility, who have projected a small rise in unemployment at the end of the Scheme.

What next?

Businesses are faced with a very difficult decision and ultimately, any action will be taken on a case by case basis. The majority of the economic is open, with cases on the decline despite loosened restrictions. Consequently, the Scheme may well have achieved its main goal; to save as many jobs as possible.

Find out more and get advice

If you are an employer grappling with the end of the Scheme, or an employee who is concerned about what could happen to your employment, please contact our employment law specialist Matthew Warren on 0117 929 2811 or email matthew.warren@wards.uk.com to discuss your options.

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