Furlough leave extended to 31 October 2020

The Chancellor’s announcement to extend the Coronavirus Job Retention Scheme (“the Furlough Scheme”) to the end of October will come as a relief to many.

As ever with the Furlough Scheme the detail shared with this initial announcement is scarce and, at times, confusing.

What is clear is that the Furlough Scheme will now continue in its current form until the end of July. This means that employers will continue to be able to claim back 80% of salary up to £2,500 per month for a further month beyond the previous expiry of the Furlough Scheme of 30 June.

From 1 August, furloughed staff “will be able” to return to work part time, with employers being asked to pay a contribution of the employee’s salary. It is not clear what level of contributions employers will be asked to pay, or the conditions attached to any continued funding under the Furlough Scheme.

The press release states that payments by employers “will substitute the contribution the government is currently making, ensuring that staff continue to receive 80% of their salary, up to £2,500 a month”. It is not clear what this means in reality and it is unclear to what extent an employer will be required to “substitute” the government’s contributions.

It is also not clear whether, from August, furloughed employees have to return to work part time, or whether government funding will still be available in full where employees have no work to carry out and remain off work entirely.

The Government has said that specific details and more information around the changes to the Furlough Scheme will be provided by the end of May.

Comment

Unsurprisingly perhaps there are many unanswered questions regarding how the Furlough Scheme will operate after 31 July 2020.  Employers may, however, want to delay redundancies or the introduction of working hours schemes or the introduction of unpaid leave until further information about the changes to the Furlough Scheme is provided. We also recommend that employers seek advice before writing to employees to furlough them for a longer period so that the furlough agreement addresses the changes to the scheme as far as possible given the limited information currently available.