No Extension to Furlough Scheme

Alongside the Prime Minister’s announcement yesterday evening regarding the extension of so called “Freedom Day” to July 19^th, numerous reports currently suggest that, despite this, the Government will not be extending the Coronavirus furlough scheme.

The job support scheme in place at the moment is due to be phased out from July and finish completely at the end of September.

As you are no doubt aware, the Government currently pays 80% of a furloughed employee’s full wage, up to £2,500 per month. Under the phasing out of the scheme, this will reduce to 70% on 1 July and 60% from 1 August with increasing contributions required from employers in order to be able to claim.

This means that some businesses will have to remain closed or operate at a much reduced capacity by Government order but nonetheless begin contributing to employee’s wages that many most likely cannot afford. This delay to Freedom Day, at a time when many businesses are operating at a loss will mean crucial and difficult decisions may need to be made. These might include, for example, whether pay cuts must be enforced or whether redundancies need to be made.

A number of organisations, including the British Chamber of Commerce have called on the Chancellor to extend the furlough scheme, but as yet there is no such agreement and is arguably unlikely to be given.

For all businesses now facing difficult employment decisions in the weeks and months ahead, we understand that such matters need to be handled with care and sensitivity but also with a strong focus on the commercial objectives of the business. Our expert team are on hand to help with all employment law and HR related matters. Please contact us on 01625 507506 or at [email protected] for help and advice.