The Coronavirus Job Retention Scheme (CJRS) which was due to end on April 30 has been extended until September 30.
The announcement came as part of today’s budget (March 3) delivered by chancellor of the exchequer Rishi Sunak.
Under the continued CJRS, employees can be fully furloughed or working part-time. Employees will receive 80 percent of their current salary for hours not worked, up to a maximum of £2,500.
Employers are currently asked to cover National Insurance and employer pension contributions which, for the average claim, the government said accounts for just five percent of total employment costs.
From July, employers will also be expected to pay 10 percent towards the hours their staff do not work and this figure will rise to 20 percent in August and September, as the economy reopens.
Joanne Frew, head of employment law at DWF, said: "With the latest ONS figures showing the UK unemployment rate at 5.1 percent, the extension of the CJRS to the end of September will be a lifeline for employers. The CJRS has protected over 11 million jobs since it was launched in March 2020. This further extension should help protect jobs over the coming months when restrictions are due to be lifted and the economy can begin to re-open.
"With the clear four step strategy aiming for restrictions to be lifted by June 21 2021, the extension of the CJRS to September 2021 allows a degree of flex, (1) for the opening up to be delayed if the data on COVID cases requires this and (2) giving businesses breathing space to get up and running before furlough support comes to an end."