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Furlough scheme extended

Posted on 12 May 2020

As the country is taking babysteps towards a lifting of lockdown and employers are grappling with issues regarding a return to work, the Chancellor delivered some welcome news today for anyone worried about a furlough cliff edge at the end of next month. A possible extension of the furlough scheme has been anticipated for the last few days and an announcement was widely expected this week, but the details were kept under wraps. After today's announcement, this is what we now know:

  • The job retention scheme will be extended until the end of October.
  • It will remain unchanged until the end of July.
  • Thereafter there will be greater flexibility under the scheme to support a transition back to work, including an option to take advantage of furlough on a part-time basis.
  • From that time, employers will also be asked to start sharing the cost of paying salaries under the scheme.
  • But employees will continue to receive the same level of pay, i.e. 80% capped at £2,500 per month.

The extension addresses concerns raised by numerous employers about the impact an abrupt end of support would have on their businesses, including the risk of redundancies,  at a time when most workplaces would still be a long way away from returning to business as usual. And given that many will be considering a gradual or phased return to the workplace, the ability to use furlough on a flexible or part-time basis will be hugely welcome.

It remains to be seen the level at which employers will be required to share the salary costs under the scheme with the Government or whether there could be different rules for different sectors. However, as with most things furlough we have to wait for further guidance, which has been promised by the end of this month.

Read the latest updates in our FAQs for employers.

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