Chancellor extends furlough job retention scheme until end of October

furlough job retention scheme extended

The UK scheme to pay wages of workers being furloughed  because of coronavirus will be extended to October, Chancellor Rishi Sunak said.

What is the furlough scheme?

Officially called the Coronavirus Job Retention Scheme and was first introduced in March and initially extended until the end of June. It allows employers to stand down workers but then claim a cash grant of up to 80% of their wages, capped at £2,500 a month. The money is claimed by the company and distributed to staff, so individuals don’t have to do anything themselves. Some employers decide to make up the 20% difference, some do not.

How many people are using the scheme?

Huge numbers – the government revealed on Tuesday that the scheme is currently paying out to around 7.5 million employees, a quarter of Britain’s private sector workforce.

How is it changing?

It is being extended for another four months, to the end of October 2020 but with a number of changes. Crucially the 80% rate is being retained, squashing concerns that Chancellor Rishi Sunak would cut the government contribution to 60%.

Mr Sunak confirmed that employees will continue to receive 80% of their monthly wages up to £2,500. But he said the government will ask companies to “start sharing” the cost of the scheme from August onwards.

The chancellor told the Commons that from August, the scheme would continue for all sectors and regions of the country but with greater flexibility to support the transition back to work, he said.

The big change, which will come into force from the start of August, is that workers will be able to return to their jobs part-time. At the moment companies must choose between putting staff into complete furlough, where they do not work at all, or keep them on full pay. From August furloughed workers will be able to return to work part-time with employers being asked to pay towards the salaries of their furloughed staff.

The government said it is also exploring ways in which people can do additional training or learn new skills while they are furloughed and their employer is receiving money from the government.

What about the self-employed?

Currently, there has been no further update on changes to the Self Employment Income Support Scheme, although the government says ‘it may be extended’. The scheme is open from Wednesday 13th May – check your eligibility here and how to claim: gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

We will bring further details on this story as it develops and any subsequent official statement from UK government with any useful links. The current guidance from the government can be found here (this will be updated with the latest announcements soon): gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

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