The Chancellor of the Exchequer has announced that employers will start sharing costs of furlough from August.
Rishi Sunak said that the job retention scheme, which is currently supporting 7.5 million furloughed workers, will be extended to October.
Employees will continue to receive 80% of their wages up to a monthly cap of £2,500, but the government will now ask employers to “start sharing” the costs of furlough from the start of August. Employers would be able to bring back employees part-time.
Speaking in the House of Commons, the chancellor said that after August the scheme would continue for every sector but with greater “flexibility” to support the transition back to work.
Edwin Morgan, Director of Policy at the Institute of Directors, welcomed the extension. “A part-time furlough provides a much-needed launch ramp so businesses can start to get back up to speed,” he said. “A more flexible approach will allow firms to raise activity levels in tandem with demand, helping to avoid cashflow issues.”
Frances O’Grady, General Secretary of the Trades Union Congress (TUC) said that “changing the rules to allow part-time working is key to enabling a gradual and safe return to work. And maintaining the rate at 80% is a win for the pay packets of working families. As the economic consequences of Covid-19 become clear, unions will keep pushing for a job guarantee scheme to make sure everyone has a decent job.”
The chancellor has said that more detail on the scheme will be published by the end of May, but workers will continue to receive the same level of support that they do now.