Chancellor extends furlough scheme to March with government to cover 80% of pay

Thu 5 Nov 2020
Posted by: William Barns-Graham
Trade News

furlough

With the second wave of Covid-19 leading to new lockdown restrictions around the UK, the government has extended the furlough scheme designed to protect jobs.

Initially the scheme was to last until December, but Chancellor Rishi Sunak today announced it will now last until March.

However, he told the Commons that the government will review the policy in January, reports the FT.

Sunak said the job retention bonus – a £1,000 payment for retaining furloughed staff until the end of January, expected to cost up to £9bn – would be scrapped because of the new extension.

Essentials of the scheme

Under the Coronavirus Jobs Retention Scheme, employees placed on furlough receive 80% of their pay up to a maximum of £2,500 a month.

The scheme subsidises the wages of people who can’t do their jobs, either because their workplace is closed or there is no longer enough work for them to do.

Furlough was due to be replaced by the Job Support Scheme on 1 November, but this has been postponed due to the extension of the Jobs Retention Scheme.

How is it different from the first scheme?

Employees won’t notice any difference in their pay packet and the government will now cover 80% of wages as it did in the spring.

Firms were having contribute to 20% of furloughed wages in recent months, with the government paying 60%.

Other changes include:

  • Employers can now bring back employees part-time and furlough them for the rest of the time they are not working
  • Employees can be furloughed regardless of whether they are on full-time, part-time, agency, flexible or zero-hour contracts, but they must have been on the payroll since 30 October 2020
  • Employees can take on other jobs while on furlough, if it doesn’t breach their existing contract
  • Anyone made redundant after 23 September can be rehired and put back on furlough

Devolved nations

In Northern Ireland, Scotland and Wales tougher lockdown restrictions were already in place before England entered lockdown today (5 November).

The government had still been covering 60% of furlough pay in the devolved nations with businesses having to put the remaining 20%, but this will now increase to 80% in line with England.

Other support

The government will also give firms:

  • Up to £3,000 per month under the Local Restrictions Support Grant if their premises are forced to close
  • £1,500 for every out-of-work 16-24 year-old given a “high quality” six-month work placement
  • £2,000 for every under-25 apprentice taken on until the end of January or £1,500 for over-25's

A grant to self-employed people affected by coronavirus has also been raised to 80% of profits, with a maximum grant of £7,500 for the November-to-January period.