Furlough extended – again
Key Contact – Claire Knowles
Author – Rebecca Mahon
At lunchtime today Rishi Sunak confirmed that the coronavirus job retention scheme (or “furlough” scheme) will be extended to the end of October. This announcement comes not much more than 24 hours after Boris Johnson announced that if you can’t work from home, you should go to work.
The Chancellor said that the precise details to accompany this latest extension will not be shared until the end of May, but in the meantime, we understand that:
- The scheme will be extended, exactly as it is now, until the end of July.
- From August onwards, employees will be able to be “part-time” furloughed, as they gradually return to work. Mr Sunak explained that from August, employers will be expected to share the cost of paying 80% of furloughed workers’ wages.
7.5 million jobs have been furloughed. This reportedly amounts to a £14 billion pound bill for the Treasury every month, and last week Mr Sunak said the scheme could not continue in its current form. As such, whilst many people were expecting some sort of extension to the scheme, an extension for all industries and sectors until the end of October came as a bit of a shock, especially given the Prime Minister’s announcement last Sunday.
The problem is that without extension, many businesses would have had to start collective consultation with staff about redundancies this week. Employers making more than 100 people redundant within 90 days at one establishment must collectively consult for at least 45 days. The penalties for failing to comply with collective consultation obligations can be severe. Mr Sunak therefore had to do something this week, and perhaps extending to July “as is”, with further information about what will happen from August onwards to follow, was the only viable option.
The clarification that from August, employers will be able to bring back employees part-time is a welcome one. We will be keeping a close eye on developments as and when they become available. In the meantime if you have any questions, please do not hesitate to contact our employment team.
Claire Knowles – Partner
Mark Alaszewski – Associate
Rebecca Mahon – Solicitor
Adam McGlynn – Trainee Solicitor