At lunchtime today (12 May), the Chancellor announced an extension to the Coronavirus Job Retention Scheme (“the Scheme”). Previously extended to the end of June, the Scheme will now be in place until the end of October.
In recent days, there were suggestions that the Chancellor would reduce the amount payable to employees from 80% to 60% of salary, as well as reducing the maximum cap of £2,500. Almost a quarter of the UK workforce have been furloughed, with their employers taking advantage of the Scheme to cover part of their wages.
Today’s announcement has confirmed that employees will continue to receive 80% of their salary during the period of the scheme and that no change will be made to the maximum cap. However, in a series of tweets prior to answering questions on the topic in Parliament, the Chancellor confirmed that employers will be asked to start sharing the cost of paying salaries.
Quite how this cost sharing will come about remains to be seen. Unfortunately, no detail has been provided today on the level of contribution expected of employers, whether it will be sector specific, or the affordability of an employer contribution if social distancing measures are still in place. Fuller details have been promised by the end of May.
It is expected that this employer contribution and reduction in the levels payable by the Government will apply from August onwards.
Taking on feedback from business, greater flexibility will also be built into the Scheme and the use of furlough leave with an eye on transitioning employees back to work. As it currently stands, an employee cannot undertake any work for their employer during the period of furlough leave. This creates difficulty for employers where there is a definite slowdown but not a complete cessation of work.
From August, employers who are currently using the Scheme will continue to be eligible to receive funds under the Scheme while employees work reduced or part-time hours. Again, fuller detail is expected at the end of May and it is hoped that this will confirm if a maximum weekly cap of hours will apply or if written agreement to these reduced hours is needed.
As the Scottish Government continues with the Stay At Home guidance, this announcement will be welcomed by Scottish businesses who are unable to open but unsure about how employee wages would be covered in the coming month. We will continue to update our site when we have further detail so check back regularly for the most up to date information.