The furlough scheme has been extended to October 2020
On 12th May 2020, the Chancellor announced the extension of the Coronavirus Job Retention Scheme to 31 October 2020, which is a very welcome step for a broad range of businesses in our region.
The announcement included three key themes, all of which were positive in respect of enabling businesses to plan for the recovery from the COVID-19 lockdown.
The three main themes were:
|Theme announced||What was announced||Benefit to employers and employees|
|Continuation and certainty||The CJRS will continue as a means of provision of grant funding towards the costs of employees up to 31 October 2020.||This provides businesses who have been using CJRS to support their workforce with welcome certainty and greater ability to retain staff as the lockdown progresses (and latest statistics show more than one million businesses have been using CJRS). The Government’s announcement was expected to be an announcement to the end of September, so the extension to October is more helpful to employers than was expected and will provide certainty to employees for a longer period of time.|
|Funding for employees at the same level, but from August employers to contribute some of the cost||The level of support provided to employers for employees will ensure that they can continue to receive 80% of their salary, up to £2,500 a month (with the employer able to reclaim NIC and certain pension costs in addition). The Government have indicated that employers will have to contribute towards the cost from August.||The support for employees remaining at the existing level of 80% (as exists at the moment) helps to reinforce that the CJRS is primarily intended to provide financial reassurance to employees. We expect that the mechanism for employers to contribute will mean that from August the amount the government will fund will reduce (for example to a 60% rate) with the employer being asked to make up the difference. This will also help to encourage employers to bring more employees off furlough and back into active duties (if the employer is paying towards a staff member who would be unproductive).|
|Additional flexibility to encourage employers to bring staff back into active duty||There will be greater flexibility introduced into the scheme in August – the details are not yet known but it is understood that this is likely to be part time working being allowed under furlough and the removal of the 3 week minimum period for a furlough “cycle”||The additional flexibility within the scheme which would be created if part time working is allowed will make it much more helpful for businesses who might want to bring staff back gradually on a part time basis. Equally it will also be easier if a business can make decisions on a more frequent basis than the 3 week minimum period allows.|
Further detail of the announcements in relation to the employer contributions, and the additional flexibility, will be provided by the Government before the end of May. This is intended to allow businesses to plan properly as the scheme moves from the CJRS grant funding mechanism as exists now (which will apply up to the end of July 2020) to a more transitional arrangement in August (to October).
In the transitional arrangement, it is clearly intended that the scheme will continue to provide financial support but the message is to try to bring the employees back into productive work (whilst mitigating financial risk).
We will update our blog covering the detail that underpins the scheme when the Government has provided the additional guidance promised for late May 2020. In the meantime, you can read our existing CJRS blog which was updated on 20th April.
For further information or advice, please contact us at email@example.com.