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Another month, another furlough scheme update

Posted
January 5, 2021
Employment Law

Over the last few months, we have written a number of articles on the furlough scheme and the changes made as a result of the worsening COVID-19 pandemic. So, what has the last few weeks brought us?

Latest developments

Shortly before Christmas, Rishi Sunak (the Chancellor of the Exchequer) announced a further extension of the furlough scheme. It will now stay in place until the end of April 2021, rather than closing at the end of March.  

We had previously been led to believe that the level of financial support available under the scheme would be reviewed in January 2021, with the prospect that it would be reduced in relation to claims made for February and March. However, Mr Sunak has now confirmed that the current levels of support (80% of pay, subject to a £2,500 monthly cap) will remain unaltered until the planned closure of the scheme in April 2021.

This will be welcome news to many employers and may help to stave off the difficult decisions that some businesses will undoubtedly face if the scheme closes its doors before employers are in a position to stand on their own two feet.

Does the Government need to do even more?

Given the worrying recent statistics showing the increasing levels of unemployment here in the UK, the closure of the furlough scheme (whenever it happens) is likely to represent a watershed moment for many employers. The CIPD recently wrote to the Chancellor recommending that the furlough scheme should be extended to the end of June 2021, with 80% wage support until March 2021. The CIPD suggests the scheme could then taper off to 70% support in April and 60% support for May and June; this would be similar to the taper we saw in the run up to the end of October 2020.  

It will be interesting to see whether the furlough scheme is extended again. No doubt, much will depend on whether the latest national lockdown manages to suppress infection rates and how successful the vaccine roll-out proves to be.

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