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Startup Guides May 12, 2020 3 min read

UK Furlough Scheme Extended by 4 months – Our Analysis

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Rob Winspear

I mentioned in my last blog post (discussing redundancy) that the Coronavirus Job Retention Scheme (“CJRS”) cannot last forever. The government knows this but has felt that now is not yet the right time to wind down the scheme in any substantial way and has in fact extended the scheme in their latest announcement. Good news for employers and staff alike!

Changes to the Coronavirus Job Retention Scheme (furlough leave)

Here’s what you need to know:

  • The scheme is not ending abruptly as was rumoured and has been extended until the end of October. This takes the CJRS up to 8 months of support from when it was first announced in March.
  • Mr Sunak announced that furloughed employees may be brought back in a part-time capacity. Presumably this means more flexibility over the 3-week hard stop on the length of time you had to be furloughed before you were eligible for a government payment.
  • Furloughed staff will continue to receive the same level of support, at 80% of their salary levels, but Mr Sunak implied that some of this 80% will now have to come from businesses themselves.

Mr Sunak explained that the fine details of these announcements will be hammered out in the coming week.

Are these changes to the scheme a good thing?

Given that the government has reported that 7.5 million people are receiving furlough payments from the government, the debate around the changes is understandable. There are valid arguments on either side. Some say reducing the scheme too soon might cause a large surge in job losses which may lead to greater costs later down the line. Others argue that the longer we hibernate our economy the deeper the resulting recession will be.

In my opinion, the announcement has positive and negative implications. The main positive is flexibility for employers. Extending the scheme, allowing part-time work and part-time furlough, and continuing to offer significant government support (albeit looking like less than 80% coming from the government now) will stop many employers making hasty decisions about redundancy. These changes give those employers the time to see for themselves what the post-furlough business landscape is going to look like as we return to work, allow them to make more considered decisions on how to respond to the coronavirus challenge and give them more options than the binary choice of keeping staff in employment or making them redundant.

It is understandable that the government is attempting to reduce the cost of the scheme now that it is costing nearly as much as the NHS to run. However, this sentiment forgets the fact that if businesses are having to furlough their staff, they are obviously in financial difficulty. Some worse than others. For those companies who are already in severe financial difficulty, I wonder how they are going to find the cash reserves to share the load with the government. This is especially true when I consider how our own Furlough Notice was used by our customers. Very few offered the ‘20% top up’ that our agreement allowed them to do. This implies that such companies are not in a position to offer any support above what the government is offering. I fear that this additional burden on the worst affected businesses may lead to further redundancies. 

Is there anything else that could be done?

It is very difficult. The scheme is expensive and cannot last forever. It is inevitable that it will have to be phased out. I was surprised to hear the scheme was going to be extended until the end of October. I hope that the newly announced return to work plan will be a success and the economy can return to health as quickly as possible to avoid any further job losses or insolvencies. Overall I would say that this extension to the scheme should be welcomed.

Returning to work

Yesterday the government also published their guidance on how to return to work and to work safely during the coronavirus pandemic. They segmented their guidance into 8 different types of work (you can look at those specific guides here).

Mr Johnson’s message to the British Public on Sunday evening (May 10) was not as clear as it could have been. He seemed to suggest that if you cannot work from home then you must attend your place of work. This must have worried a lot of people. People who are more at risk to the virus. People who have children and nobody to care for them while they work as schools remain shut. People without cars who would be forced to take public transport.

My take on that announcement is that the Prime Minister cannot decree new law during broadcasts to the public. Law has to be made in the normal way. What I mean by that, is that employment law remains the same as it was before.

If your employer does not think it is safe to return to the office they are not obliged to resume operations. If your employer is insisting you return to work despite valid concerns or problems that reasonably prevent you from doing so, you should submit a grievance to your manager or your HR department if there is one. This will force them to follow a fair procedure to consider your grievance and should reduce the risk of unfair treatment.

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