UK’s furlough scheme extended until March 2021 - | Hudson McKenzie

UK’s furlough scheme extended until March 2021

At the beginning of the UK’s national lockdown triggered by the pandemic, the UK government launched a scheme in attempt to keep the economy afloat, prevent mass job losses and support businesses that could not afford to operate. This is commonly known as the ‘furlough scheme’ and has been utilised by approximately 95% of UK businesses overall. This was due to end on 1st November 2020 where a new scheme was supposed to be implemented to replace it, known as the Job Support Scheme (JSS).

However, since the UK took the executive decision to go into another national lockdown on 5th November, the UK government faced much pressure and felt the need to extend the furlough scheme. The Chancellor of the Exchequer, Rishi Sunak, recently announced to the Commons on Thursday 5th November that the furlough scheme would not be replaced, but extended until March 2021.

What this means is that the UK government will continue to pay 80% of the salaries of employees up to £2500.00 per month until March of next year. This is justified by the government’s intention to provide “business security during the winter”. This goes hand in hand with the Bank of England’s pledge to put £150 billion into the UK economy for economic survival over the winter months.

There are additional parts to the extension of the scheme. Firstly, for those who have been made redundant beyond 23rd September 2020 can be rehired and placed back on the furlough scheme by their employer. In addition, those claiming via the Self-Employed Income Support Scheme (SEISS) will receive further monetary support between November and January, with the UK government providing financial relief of 80% of average trading profits, at a cap of £7,500.00.

Although this “Tory U-Turn” has been scrutinised because of the Conservative government’s delaying of the inevitable, this has ultimately been welcomed, albeit this allegedly should’ve been introduced earlier.

What is a factor of concern is that the scheme will operate for a further 5 months, with its full operation almost amounting to a year in total. Considering that the Prime Minister, Boris Johnson, proclaimed that the lockdown restrictions would only be imposed for a maximum of a four week period, this beckons the question: why is the scheme being scheduled to last for a further four months? Is this a preliminary measure or is there a plan of extending the current lockdown for more months to come? This raises a point of continuous discussion by the public.

Should you have any queries regarding the above information or if you require legal assistance with your employment matter, please get in touch with a professional at Hudson McKenzie via email at londoninfo@hudsonmckenzie.com or by telephone +44(0)20 3318 5794.