What do we still need to know about the extension of the Coronavirus Job Retention Scheme to October 2020?

In positive news, the Chancellor has announced that the Coronavirus Job Retention Scheme (the “Scheme”) will be extended until the end of October 2020.

However, the announcement was made in broad-terms and essential details of the extension are outstanding. These are promised by the end of the month.

We do know that the Scheme will continue to operate so that eligible furloughed staff are paid 80% of their salary (up to £2,500 per month). Yet, from August 2020, it appears that HMT will make two key changes to the Scheme, both with the aim of weaning the economy off of furlough:

1. employers will be “asked to pay a percentage towards the salaries of their furloughed staff”; and
2. furloughed staff “will be able to return to work part-time”.

The devil is in the detail. Important questions now arising for employers include:

• What percentage of employees’ salaries will they be unable to reclaim under the Scheme from August 2020?

• Is any such reduction in the claimable sum conditional on the employer’s consent in each case (as suggested by the language that employers will be “asked” to pay a percentage of salaries)? However, the answer to this is likely “no”. Language used elsewhere in the announcement cuts against it, as do wider policy considerations (HMT is clear that it seeks to run down the Scheme in the longer term).

• How much work will furloughed staff be permitted to do “part-time” whilst remaining eligible under the Scheme?

• Is it is only those furloughed staff who work part-time in relation to whom employers will be unable to claim the full 80% of salary under the Scheme, or will the same apply to all furloughed staff across the board?

The answers to these questions will be critical to the viability of many businesses.

However, those businesses still have strategic decisions to make now. At the risk of sounding like a broken record (see previous post here and here), employment law continues to apply to the relationship with furloughed staff. Accordingly, any employer which assesses that paying a percentage of the salary of its furloughed staff from August 2020 may result in redundancies should turn its mind to complying with its statutory consultation requirements sooner rather than later.

This post may not be relied upon as legal advice. 11KBW’s barristers are able to assist with any queries.