Government furlough scheme extended until October
The Government's furlough scheme will be extended to the end of October, Chancellor Rishi Sunak has announced. The scheme was previously only set to run until 30 June.
Speaking in the House of Commons today, the Chancellor said that until the end of July there would be "no changes whatsoever" to the scheme, but that from August to October it would continue "with greater flexibility to support the transition back to work", with employers then able to use the scheme to bring employees back part-time.
Employers would then share the cost of paying salaries with the Government.
Full details of how this will work are yet to be confirmed, but Sunak said this detail would follow by the end of May, and confirmed that employees would continue to be paid up to 80% of their salary, up to a maximum of £2,500/month.
You can see MSE founder Martin Lewis's view on the announcement below (you can turn subtitles on if you want/need them):
See our furlough need-to-knows for full details of how the scheme currently works. We'll add the full details of the scheme extension there too, once published.
How will the scheme work after July?
Until the end of July, the furlough scheme will run in the same way that it does now, with employees being unable to work for the company that's furloughed them, and the Government paying 80% of their salary – their employer can top this up to 100% if they wish to.
But from the start of August, furloughed workers will be able to return to work part-time with employers being asked to pay a percentage towards the salaries of their furloughed staff.
The employer payments will substitute for at least part of the contribution the Government is currently making, the idea being that furloughed staff will continue to receive at least 80% of their salary, up to £2,500/mth.
What is the furlough scheme & how does it work now?
In a response to the pandemic, the Government has brought in the furlough scheme – officially called the Coronavirus Job Retention Scheme (CJRS) – to help employers pay their workers during lockdown, even if there's no work for them to do.
Think of this like a job being put on standby. The idea is you go into sleeper mode during the crisis, and then when it's over, they can instantly restart things and get the economy running again. Here's how it works in brief...
- The state pays your employer 80% of your salary, up to £2,500/mth. The scheme opened to employers on Monday 20 April, with the first payments being made within six working days. Employers could backdate claims to the beginning of March.
- You needed to have been on your employer's payroll on 19 March 2020 to be eligible for furlough. When the scheme was launched, it applied to those on their employer's payroll by 28 February 2020. However, the Treasury extended the scheme to include people who were on a company's payroll on 19 March 2020.
However, there's a technical caveat here – it's likely you needed to actually have been paid at least once by your employer by then. This is because your employer needs to have made a payroll submission about you to HMRC on or before 19 March 2020. We say it's likely you'll need to have been paid, as it's possible your company could have made a payroll notification to HMRC before the cut-off, even if your first salary payment came after. To help, Martin's done a video explaining this caveat.
- Your employer can choose to 'top up' the Government grant. It can pay your full salary while you're furloughed – but it's not obliged to do this. And indeed, many won't have the funds to be able to do this.
- It's up to your employer to decide and define who is furloughed. It could be because you've no work to do, but it can also be because you have to be home to look after children or you're self-isolating. The key to this is that the state is looking to support people, so this isn't about loopholes to catch people out, it's about a broad sweep to gather people in.
You can see more details by seeing our furlough need-to-knows.
What does the Government say?
Chancellor Rishi Sunak said: "Our Coronavirus Job Retention Scheme has protected millions of jobs and businesses across the UK during the outbreak – and I've been clear that I want to avoid a cliff edge and get people back to work in a measured way.
"This extension and the changes we are making to the scheme will give flexibility to businesses while protecting the livelihoods of the British people and our future economic prospects."