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Coronavirus Job Retention Scheme: Chancellor’s update

On 12 May the Chancellor Rishi Sunak set out a brief update in parliament on the future of the Coronavirus Job Retention Scheme. The scheme was set up on 26 March and supports employers by paying 80% of a furloughed worker’s pay up to a cap of £2,500 per month.

The Chancellor’s recent announcement came as a result of an urgent question in parliament and confirmed that the scheme is being extended for another four months, to the end of October 2020. For the next two months, until the end of July, the scheme will remain in its current form across all regions and sectors in the UK economy, but from the start of August there will be two significant changes:

1. Workers will be able to return to their jobs part-time, with employers still receiving support under the scheme; and 2. Employers will be required to pay towards the salaries of their furloughed workers.

The announcement made clear that the 80% pay level will remain, but that the level of contributions employers will be asked to make to their furloughed worker’s salaries to replace the current level of government funding is not yet specified.

More detailed guidance on the changes to the furlough scheme are anticipated by the end of the month. This announcement is welcome news to employers concerned about an imminent end date for the CJRS, particularly if the impact on their business is such that they would need to undertake a large scale redundancy exercise. The announcement’s focus on allowing employers to retain government support while returning workers on a part time basis goes hand in hand with the recently published return to work guidance from the government setting out in detail the changes employers should make to their workplaces to allow for their staff to return to work.

Please get in touch with any of the authors of this article, or your usual Fladgate contact, if it would be helpful to discuss these themes or others in the context of any issues that you might be facing.

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