Furlough extension: What does it mean for workers and businesses?

Chancellor Rishi Sunak has announced that the Government’s furlough scheme is to be extended until the end of October. But what does it all mean for workers and businesses? The PA news agency takes a look.

– What will happen to workers on furlough?

Mr Sunak said they will continue to receive 80% of their pay – up to £2,500 a month – until the end of October.

This extends the original furlough scheme to eight months since it was launched in March.

The Chancellor also said there will be the possibility of part-time returns for staff from August, pointing out that manufacturers have been asking for staggered shifts to reopen production lines.

– Are there more details on part-time returns and can I take a job elsewhere?

The details will be published later this month, but Mr Sunak stressed to MPs that furloughed workers can take jobs elsewhere while on the scheme.

Government advice says: “If your contract allows, you may undertake other employment while your current employer has placed you on furlough, and this will not affect the grant that they can claim under the scheme.”

However, staff cannot work for their employer while furloughed.

– Will the Government continue covering the cost?

The Government will fund the furlough scheme, which has supported seven million jobs at a cost of £14 billion a month, until the end of July.

After that, companies will be expected to make a contribution to the payments, although the amount workers take home will not fall below the 80% mark.

– How much will businesses be expected to pay towards furlough?

The details will be published later this month, the Chancellor said, but it is likely to be judged on a sector-by-sector basis, similar to the details published on Monday by the Department for Business, Energy and Industrial Strategy (BEIS) for companies looking to reopen under new “Covid Secure” measures.

With certain sectors returning to some normality, others, including restaurants and gyms, remain unlikely to reopen fully for several months.

– Can we expect to see furlough extended beyond October?

The Government has said it will continue to monitor the situation and is willing to adjust advice accordingly.

But Mr Sunak made clear it is unlikely to be extended.

He told the Commons: “We will keep everything under review but my expectation is by then (November) the scheme should end. We’ve stretched and strained to be as generous as possible to businesses and workers, which is why we have made the decision that we’ve made today.”

The Chancellor added: “But … this scheme is expensive. It’s the right thing to do. The cost of not acting would have been far higher but it’s not something that can continue indefinitely into the future. Eight months of total support is a considerable amount of time.”

– Are there any other significant changes to the furlough scheme?

More details will come this month, but MPs raised concerns from self-employed workers who pay themselves via dividends, asking whether they would be able to receive further support.

However, Mr Sunak insisted current support is strong enough.

– Why is the Government announcing the extension now?

Under employment laws, companies must start informing any staff they plan to make redundant within 45 days of any changes.

The previous furlough scheme was due to end by July, meaning consultations would need to begin imminently, but the extension to October will address it.