Partner Sue Dowling, head of our Employment Law team, outlines the extension to the Coronavirus Job Retention Scheme announced on 12 May 2020, and future changes to the furlough scheme.
On 12 May 2020, Chancellor Rishi Sunak provided a much anticipated update on the future of the Coronavirus Job Retention Scheme, also known as the furlough scheme.
He confirmed that:
- The Scheme will continue in its current format, with employers able to claim for 80% of furloughed workers’ pay to a maximum of £2,500 per month until 31 July, with the Scheme due to be extended from its previous end date of 30 June 2020. This remains subject to existing criteria and procedural requirements, including the fact that furloughed employees cannot carry out work for their existing employers.
- From 1 August to 31 October 2020, whilst the Scheme will continue for “all sectors and regions of the UK”, it will be on varied terms which are not yet known. Further guidance is promised before the end of May. It is anticipated that those terms are likely to permit furloughed employees to undertake some work for their existing employers, but this will have implications on the proportion (%) of the grant that the employer can then recover under the Scheme. Mr Sunak also said that from 1 August, the Government “will ask employers to start sharing the costs of paying people’s salaries”, meaning that the current level of support provided by the Government will likely be reduced for at least some, if not all, employers.
The scheme is currently costing the government an estimated £14 billion per month and come 31 October, it will have been in place for eight months. A quarter of the UK’s workforce, 7.5 million people, are now covered under the Scheme, resulting in it costing a similar amount every month to the running of the NHS.
The Government had been under pressure from both employers and unions to avoid a sudden ending of the Scheme. Mr Sunak explained that the proposed extension and changes over time aim to provide employer with “greater flexibility to bring staff back to work.”
Further information was not provided as to whether the Government’s support for those who are self-employed would be extended or changed in any way, with the Chancellor saying that he plans to keep things “under review”. The Government has however confirmed that the Self-Employment Income Support Scheme has been rolled out earlier than expected, with self-employed people likely to receive a grant (equivalent to 80% of their average monthly trading profits up to £2,500 per month).
You may find our earlier blog article, 'Life After Furlough Leave - Employment Issues Which May Face Employers' of interest.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
