Extension of the Furlough Scheme Until October 2020

26th May 2020 by

The Government’s Coronavirus Job Retention Scheme will remain open until the 31 October 2020, as announced by the Chancellor on 12 May 2020.

The latest statistics reveal that the job retention scheme has protected 7.5 million workers and almost 1 million businesses.

A new flexibility will be introduced from the beginning of August with the focus to get employees back to work and boost 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. The Chancellor has stated that “the 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”.

The government will explore ways through which furloughed workers who wish to do additional training or learn new skills are supported during this period.

More specific details, clarification and information around its implementation will be made available by the end of this month.

What does the Treasury Direction say?

The updated Direction does not deal with the extension of the scheme to October nor the changes to the scheme that are due to take effect in August.

However, the new wording on the form of agreement required to place an employee on furlough removes the explicit requirement in the original Direction that an agreement must be in writing.

Now, it specifies that the agreement between employer and employee must specify ‘the main terms and conditions upon which the employee will cease all work in relation to their employment’, be incorporated expressly or impliedly into the employee’s contract, and be made in writing ‘or confirmed in writing’ by the employer. Para 6.7(c) goes on to require that the employer retain the agreement or confirmation until at least 30 June 2025.

What should employers do now?

  • Think proactively about using the furlough scheme following the announcement of the extension of the scheme;
  • Think about the future plans of your business: consider whether employees can return to work by considering the practicable solutions to ensure the safety of your employees in the workplace;
  • Consider proposing a different arrangement to employees, for example if the business has been topping up the employees’ salaries, as from August 2020, employers will substitute the contribution from the government

For information on this, or any other employment matter, please contact our employment specialists, Amy.Drake@healys.com and Allison.Grant@healys.com.