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Chancellor announces extension to the furlough scheme

12/05/2020
The Chancellor Rishi Sunak has today announced an extension to the Coronavirus Job Retention Scheme – generally known as the Furlough Scheme. 
 
The Scheme was previously set to finish on 30 June but has now been extended to the end of October. However, there will be changes to the scheme which come into effect from 1 August.  The outline of the position going forwards is:
 
• The scheme will continue in its current form until 31 July
 
• From 1 August 2020 furloughed workers will be able to return to work part-time, with employers expected to pay a percentage of the salary costs of their furloughed staff.
 
More detail on the precise nature of the changes from 1 August should be available by the end of May.
 
WR comment – this is welcome news for employers currently using the furlough scheme.  It takes away the concerns regarding a possible “cliff edge” at the end of the scheme and gives employers more time to plan for, what will be for many, only a partial reopening of their businesses as the lockdown measures progressively ease.  Clearly employers will, from 1 August, be expected to bear a proportion of the costs of their furloughed staff – those staff will continue to be entitled to 80% of the normal pay but the government contribution to this appears set to reduce.  
 
It remains to be seen what level of subsidy the government will continue to provide and therefore what additional costs employers will have to bear on respect of their furloughed employees.  Overall however this seems to be a sensible and proportionate way to gradually wind back the scheme over time.

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