Furlough scheme extended

12th May 2020

The Chancellor has just announced that the Coronavirus Job Retention Scheme, better known as the furlough scheme, is to be extended by another four months and will continue to the end of October.

The scheme is estimated to cost about £10 billion a month and the number of furloughed workers is currently around 7.5 million. The ongoing cost of the scheme is considerable and many politicians are increasingly expressing the view that the scheme discourages employers to re-open their workplace.

However, as the Chancellor stated, the scheme has protected millions of jobs and businesses across the UK during the coronavirus outbreak and he wants “to avoid a cliff edge and get people back to work in a measured way”.

The scheme will continue as it is until the end of July (i.e. the with the Government reimbursing employers for 80% of furloughed workers’ wages, capped at £2,500).

From 1 August, the scheme will remain in place for all sectors and regions of the UK but with greater flexibility. It will allow furloughed workers to work part-time and with likely changes to the level of contribution to wages paid by the Government with employers contributing to the cost of workers’ wages as well.

The Chancellor has confirmed that further detail will be provided at the end of this month.

However, today’s announcement will come as a big relief to employers and their workers who were worried about what might happen when the scheme ended on 30 June.

We will be discussing the furlough scheme extension and changes, as well as the Government’s announcements yesterday in relation to its COVID-19 recovery strategy and getting employees back to work safely at our webinar next Wednesday, 20 May. More details about the webinar will follow soon.

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