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20 May 2020
The Coronavirus Job Retention Scheme has been extended by a further four months until 31 October 2020.
Chancellor of the Exchequer Rishi Sunak announced that the furlough scheme will continue in its current form without any changes until 31 July 2020. However, new flexibility will be introduced from the beginning of August 2020, with the aim of getting employees back to work and boosting the economy.
From 1 August 2020, furloughed workers will be able to return to work part-time with employers being asked to pay a percentage towards the salaries of their furloughed staff. Sunak stated that "[t]he employer payments will substitute the contribution the government is currently making, ensuring that staff continue to receive 80% of their salary, up to £2,500 a month".(1)
The precise implications of the extension for both businesses and workers will depend on the finer details, which the government is promising by the end of May 2020. The key points that will likely be clarified are:
The latest guidance on the Coronavirus Job Retention Scheme appears to confirm that it will be extended from August 2020 onwards only for employers that pay a contribution towards the 80% of salary. It is unclear what contribution will be necessary. One possibility to incentivise a return to work is that the scheme will require an employer actually to provide employees with some working hours. However, as the government will publish the details later in May 2020, it would be advisable for employers not to extend the furlough period beyond the end of July 2020 before then.
In the meantime, employers can use the news of the furlough scheme extension to think proactively about the next stage of their business continuity plans. Employers that are taking advantage of the scheme and have been topping up employees' salaries will need to consider whether they can feasibly continue to do so on a long-term basis. Given the downturn in trading that many businesses are experiencing, they may need to consider proposing a different arrangement to employees. Any change would likely require a new agreement and may be contested. Businesses whose employees refuse to consent to a furlough extension or new arrangement amending their salaries must look at other options.(2)
For further information on this topic please contact Lucy Lewis or David Lyons at Lewis Silkin by telephone (+44 20 7074 8000) or email (firstname.lastname@example.org or email@example.com). The Lewis Silkin website can be accessed at www.lewissilkin.com.
(1) Further information is available here.
(2) Further information is available here.
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