The Chancellor Rishi Sunak has announced in the Commons that the furlough scheme, intended to be extended over November, will continue to be implemented beyond the end of new lockdown restrictions.
On the 5th November, Chancellor Rishi Sunak told MPs that the furlough scheme will be extended beyond the original date of December 2nd, when lockdown restrictions in England end.
Back in September, the Government initially stated that the Coronavirus Job Retention scheme (also known as the furlough scheme) was going to be replaced by the Job Support Scheme, a less generous scheme, on November 1st.
However, a couple of days before this change was to come into effect, the Government said that the furlough scheme would instead be extended over the month of November and would end at the same time lockdown restrictions in the England were eased (December 2nd 2020). After this, it was predicted that the Job Support Scheme would come into place.
However, the Chancellor has since announced that the Coronavirus Job Retention Scheme (furlough scheme) will now continue until the end of March.
This announcement from the Chancellor was made after the Bank of England announced its intention to pump an extra £150 billion into the economy, in order to offer support amidst a rise in COVID-19 cases. This is on top of previous payments including £200 billion in March and £100 billion in June.
This means that staff will continue to be receive up to 80 per cent of their wages from the Government. In addition, the Chancellor has announced that this support will be available for all countries in the UK including Scotland, Wales and Northern Ireland until the end of March also.
Mr. Sunak stated that the furlough scheme would be reviewed in January to “decide whether economic circumstances are improving enough to ask employers to contribute more”. In addition, Mr. Sunak said that the job retention bonus, introduced to incentivise organisations to keep employees in work until the end of January, would obviously “fall away”.
The Chancellor also confirmed that for, self-employed people, the income support grant which covers November-January will increase to cover 80 per cent of average profits, up to £7500.
Neil Carberry, Chief Executive of the Recruitment and Employment Confederation, said:
Businesses want support that is stable across the crisis, rather than changing week-to-week. So the extension of the furlough scheme to the end of March is a good move.
But there is more to do. The fight against the virus is being compromised by the failure to fund Statutory Sick Pay for every worker if they need to self-isolate. The vast majority of businesses supplying temporary workers, who are vital to sectors like education, logistics and care, are ineligible for SSP support – and a stand-off over who pays could lead to greater economic damage, as work gets shelved.
We need to keep hiring demand as high as we can. Lowering the cost of labour by reducing employers National Insurance contributions, the biggest business tax, is one measure which will help.
Alexandra Flack, solicitor at Langleys Solicitors, discussed the added work these changes will cause for HR teams:
Businesses which spent time and effort preparing for the Job Support Scheme will need to throw those plans away and return to the drawing board and decide the new strategy they wish to adopt: whether they wish to take advantage of furlough, who to furlough, how long for, will the furlough be full time or flexible.
The additional benefit of the scheme is that businesses can claim it for employees who have not previously been furloughed, so employers who previously may not have had the need to furlough staff can take advantage. Similarly, employers may choose to furlough different staff.
Businesses which were considering making redundancies may also wish to review or delay this process, however, it will not help those who have already lost their jobs in the run up to furlough coming to an end.
Whatever the strategy businesses will adopt, it is vital that employers make any changes to hours / contract in writing, to ensure that they can show agreement and to ensure that they remain compliant if HMRC decides to carry out an audit.
One thing is for sure, that these further changes will increase the stress and the pressure that HR staff are already under.