Update to the furlough scheme; what it means for hospitality

 

Prime Minister Boris Johnson has now delivered his roadmap out of lockdown, giving those in England a clearer idea of when certain restrictions will ease and when normal business can resume.

Hospitality, which currently may only operate a takeaway and delivery service, will be permitted to open to serve customers outside from 12 April with indoor hospitality re-opening no earlier than 17 May.

To support their businesses while closed, many restaurant, bar, pub and hotel owners have taken advantage of the government’s Coronavirus Job Retention Scheme and furloughed their staff.

Furlough scheme has been extended further

The furlough scheme, which allows employers to claim 80% of an employee’s usual salary for hours not worked, to a maximum of £2,500 per month, was extended until 31 April 2021 and following the Budget announcement on 3 March, delivered by Chancellor Rishi Sunak, it will now be extended until the end of September.

Furlough has been a lifeline for hospitality. The industry has been one of the hardest hit by the COVID-19 pandemic with Treasury figures revealing that of the 4.7million people on furlough in January, 1.15million were employed in hospitality.

So, how does hospitality furlough now work? 

Under the new rules of the scheme, which is thought to be used by 935,000 businesses, employers can claim 80% of an employee’s usual salary for hours not worked, up to £2,500 per month. Claims can be made for employees who were employed on 30 October 2020, as long as a PAYE submission notifying a payment of earnings for that employee was made to HMRC between 20 March and 30 October.

Employees on any type of employment contract – even those on zero-hour contracts and apprentices – can be claimed for. If an employee’s fixed term contract expired on, or after 23 September 2020, they can also be re-employed and claimed for. However, the employees do have to have been registered with HMRC as an employee between 20 March 2020 and 30 October.

As restrictions will ease from June and hospitality will be allowed to re-open, furlough payments will decrease from July when the government will contribute 70% and employers will have to pay 10% for hours not worked. In August and September, the government will pay 60% and employers 20%.

Full eligibility rules can be found on the government website.

While hospitality welcomed the extension of the furlough scheme in November to 30 April 2021, there have been calls for a broader package of support to help safeguard businesses.

At the end of last year, UKHospitality CEO Kate Nicholls, said “the extended furlough scheme alone is not enough to keep hospitality alive.”

In the Budget on 3 March, the Chancellor announced plans to cancel Business Rates until the end of June, extend the VAT cut to 5% for the next seven months and offered more grants for businesses.

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