On Tuesday 12 May the Chancellor Rishi Sunak announced that the JRS (Job Retention Scheme) will be extended for a further four months, from the end of June currently until the end of October
Here are the key points
- Until the end of July the scheme will continue in its current form with no changes. Workers will continue to receive the same level of overall support as they do currently, at 80 per cent of their current salary, up to £2,500 per month
- From August to October, the scheme will continue for all sectors albeit in a modified form. This will include giving employers greater flexibility to bring furloughed employees back full time.
- In addition, from August, the government will ask employers to start sharing with the government the cost of salaries of furloughed employees. Although we don’t know the detail of this yet, it is possible that increased flexibility will be linked in some way to how much the employer contributes. Certainly it seems unlikely that the government will want to pay significantly when the employer is receiving a benefit from work done by their employees. This obviously throws up issues, such as how to keep track of how much people are working while on furlough. We will have to wait to see how the government intends to tackle this when further guidance is published.
Reasons for the Extension
One of the reasons behind this longer than expected extension to the JRS might have been the rumours circulating that employers were on the verge of starting collective redundancy consultation procedures to ensure they were completed by the time the furlough scheme ended in June. The Chancellor expressed the hope that this extension would be a “generous runway for businesses and firms to plan against and indeed start getting back to work when the time is right”. Of course this is not a magic wand which will mean no mass unemployment. However, employers’ immediate concerns on “what next” have been allayed, so this announcement should put a halt to the redundancy plans that were inevitably going on in organisations planning for end of June. However, how successful the suggested flexibility will be and how much employers take advantage of it will inevitably still depend on whether those businesses have survived the other economic problems caused by the pandemic – the change in scheme does not mean that no-one will lose their jobs nor that no employers will go out of business. However, it might spread out the impact
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We appreciate that this is a stressful and worrying time for so many of you and we do hope that you find the guidance contained in this update useful. If you require any further advice in relation to what is covered, please contact us