COVID-19 Coronavirus Business Impact: UK Coronavirus Job Retention Scheme to be Extended Until the End of October 2020

May 13, 2020

The UK Government has announced today that the Coronavirus Job Retention Scheme (“the Scheme”), which has so far assisted over one million businesses in the UK, will be extended by four months until the end of October 2020.

Until the end of July 2020, there will be no changes to the Scheme and employers will continue to be able to apply for reimbursement of 80% of wage costs (up to a cap of £2,500 per month). From August to October 2020, the Scheme will continue to operate for all sectors but with greater flexibility to enable employers currently using the Scheme to bring employees back to work part-time, as the phased return from lockdown proceeds, and with employers expected to share the cost.

Further clarification on the extension to the Scheme – and the detail of what reimbursement of wage costs will be available – is expected by the end of May. In the meantime, in addition to their planning more generally concerning the relaxation of lockdown and the issues that need to be considered as part of the process of returning staff to the workplace more generally, employers should consider the following issues:

  • whether they should extend their existing furlough arrangements: employers should consider to what extent existing furlough arrangements will need to be extended, potentially on a part-time basis, to reflect business need and ongoing lockdown restrictions. These will need to be in line with their plans regarding the return to work of those currently not attending the workplace, including the potential need for shift arrangements to maintain social distancing.

  • keeping employees informed: especially if furlough arrangements are likely to remain in place beyond the end of the current period of furlough, employers should communicate their plans to employees as soon as possible, with further details to follow, pending the release of further information.

  • reviewing and re-issuing documentation: if furlough arrangements are to be extended beyond the end of the current period of furlough then, depending on the terms of the current arrangements, employees may need to consent to this extension (which they can do by email) and to any other changes to be made to their terms and conditions that may need to be made (for example with regard to part-time working arrangements). However, it would be prudent to defer any detailed communications until further information is published by the Government on the operation of the Scheme as extended.

  • ensuring a consistent approach to holiday arrangements: the possibility of furlough arrangements being extended until October brings into sharp focus the issue of annual leave. Especially where they extend furlough arrangements, employers will need to consider whether employees can and should be compelled to take some or all of their accrued annual leave before the end of the furlough period. Employers will also need to consider how much (if any) annual leave they will allow employees to rollover into the next holiday year, not least in light of the amendments made to the Working Time Regulations concerning rollover of holiday we covered in our earlier OnPoint.

  • addressing what additional training should be offered: since the Government has indicated that it will explore ways through which furloughed workers who wish to do additional training or learn new skills are supported, employers may wish to consider what useful online training could be provided to employees during an extended period of furlough to maintain interest and motivation and to promote wellbeing. Developing training on the issues arising in relation to the process of return to the workplace may also be appropriate.

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