The UK’s job retention scheme has been extended to October, chancellor Rishi Sunak has announced, with additional flexibility and employer contributions to be expected in future changes to the system.
Speaking before the House of Commons, Sunak confirmed the furlough scheme would continue for the next four months, and furloughed workers would continue to receive 80 per cent of their monthly wages, up to £2,500. But he warned the government is asking employers to “start sharing” the cost of the scheme from August onwards.
He also said that, from August, the system would allow for greater flexibility to support the transition back to work, and furloughed employees could be brought back to work on a part-time basis.
- Return to work guidance – how are different sectors being asked to proceed?
- Two in five anxious about returning to work, poll finds
- Employers told not to ‘rush in and regret it’ as PM calls for some to return to work
However, full details on the scheme’s increased flexibility in future, and how much employers were expected to contribute to furloughed staff’s wages and from when, have yet to be confirmed. These are set to be published by the end of the month.
Approximately a quarter of the UK’s workforce, about 7.5 million people, are now covered by the scheme. Speaking to the Commons, Sunak said he was extending the scheme because he “won’t give up on the people who rely on it”.
"Our message today is simple: we stood behind Britain's workers and businesses as we came into this crisis, and we will stand behind them as we come through the other side,” Sunak said. He told the BBC that the Treasury would be “taking on the lion’s share” of the cost.
Get more HR and employment law news like this delivered straight to your inbox every day – sign up to People Management’s PM Daily newsletter
Shadow chancellor Anneliese Dodds welcomed the extension and changes, saying "at least we are moving in the right direction". But she told the Commons that the "big elephant in the room" is what the government's employer contribution will involve.
In a post on Twitter after the announcement, she said she was concerned that “we’ll see mass redundancies” if employers were “suddenly required to make a substantial contribution” to furloughed staff’s wage subsidy.
The move to extend the scheme came as the government began easing some lockdown measures, with people in England able to spend more time outside and some even allowed to return to workplaces.
Peter Cheese, chief executive of the CIPD, said the decision to extend the furlough scheme and make it more flexible would “bring a sigh of relief” from employers as businesses needed “breathing space” to bring people back from furlough gradually as lockdown measures were unwound.
“Without this, it’s very likely that the government’s job retention scheme would have proved to simply be a waiting room for unemployment,” Cheese said. “The scheme has already saved as many as four million redundancies being made and will now continue to help protect jobs as the economy slowly recovers.”
But he said “with more flexibility in the system comes a greater responsibility” for businesses to make appropriate use of the scheme and support their people. He added: “Businesses will need to show they are adapting as they gradually bring their people back to work, communicating openly, and that they have taken the necessary steps to make their workplaces safe in accordance with government guidance.”
Andy Davies, senior vice president at MHR, warned there are “more challenges and increased workload around the corner” for people professionals. He said HR should prepare to audit all future decisions on the furlough scheme including who returns to work and whether it is on a full-time or part-time basis.
“For HR, what they need to be looking at is the selection criteria of those who were furloughed and the mechanisms they used to record all that data,” Davies said. “It’s really important to be transparent at this stage because, at some point, HR might be called to audit, and you need to be prepared to show the government who was on furlough and when.”
He added that HR needed to start planning for the return of furloughed staff now, because variations in working patterns might require contractual variations in terms of hours worked or locations where staff were assigned.
Commentators also warned that some sectors might need the government to cover the full 80 per cent wage subsidy beyond the summer if redundancies were to be avoided. Kate Nicholls, chief executive of Hospitality UK, said: “The full 80 per cent may need to be extended past July for some businesses in sectors like hospitality that will still operate at much reduced levels of trade, or not yet be able to open.”