Furlough scheme to be extended by four months

posted by 3 years ago in Covid-19
Furlough scheme to be extended by four months

The Chancellor, Rishi Sunak, has announced that the government will extend the furlough scheme until October. The UK wide scheme pays 80% of the wages of employees, which have been placed on temporary leave due to the coronavirus outbreak. Across the country more than 7.5 million employees have been furloughed, with the number continuing to rise across the country.

The chancellor has confirmed that employees will continue to receive 80% of their usual monthly wage, up to a maximum of £2,500. However, due to the mounting costs, the government will be asking companies to contribute to this cost from August. It is hoped that from August, the scheme will allow for greater flexibility for companies to support employees in their transition back to the workplace. This flexibility includes measures such as employees being able to come back to work on a part-time basis.

The Chancellor has explained that further details about the scheme will be released by the end of May, specifically relating businesses requirement to share the costs of people’s salaries. However, with the current scheme expected to continue in its current form until the end of July, there will be no requirement for businesses to contribute to furlough pay until August.

The British Chamber of Commerce has largely welcomed the extension of the furlough period, explaining that the announcement would provide significant relief to businesses and their employees. It is hoped that the extension will prevent a significant number of looming redundancies as the economy begins to reopen.

Workplaces must be safe and Covid secure

However, the economic consequences of the Covid-19 outbreak are still unclear, and the Prime Minister has explained that it is not expected a sudden flood of people to return to work immediately. The government has announced that employees which cannot work from home should be actively encouraged to return to their usual place or work, but only if employers can prove they meet the new ‘Covid Secure’ safety standards.

The Department for Business, Energy and Industrial Strategy has released a series of documents outlining the new guidance for UK employers. There are eight documents in total covering topics such as how to effectively implement social distancing measures. Advice includes re-designing workplaces, staggering start times and one-way traffic systems.

To ensure workplaces are safe, the Health and Safety Executive (HSE) will be carrying out random spot inspections. In addition, any employees which feel unsafe in the workplace will be asked to report potential risks to the HSE.

Support packages for UK businesses

The furlough scheme is one of the key measures which the government introduced to protect the country from the economic impact of the coronavirus outbreak. Other financial schemes include government backed loans, cash grants for small businesses and tax deferrals. In total, the government claims more than £14 billion in loans and guarantees have been provided already in response to the crisis. However, despite the unprecedented levels of support, there are still many businesses across the country struggling to maintain the required cash flow levels.

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