Furlough scheme extended until end of October but employers will have to contribute to cost

The Chancellor, Rishi Sunak has just announced that the Coronavirus: Job Retention Scheme will be extended by a further four months to the end of October.

The scheme will continue unaltered until Friday 31 July but, from Saturday 1 August a number of changes will be made to make it more "flexible". 

1. Workers will be able to return on a part-time basis and claim furlough for their full time hours - something that unions and employer representatives have been asking for. 

2. Employers will also have to "make a contribution" towards the employee's furloughed salary. It's not entirely clear what percentage the government will continue to fund, but there have been suggestions that it will reduce funding to 60%. If that's the case, the remaining 20% will have to be topped up by the employer as the Chancellor made it clear that employees must still receive up to 80% of their normal salaries capped at the existing rate of £2,500 per month.

There was some debate about whether the scheme would be withdrawn from those sectors who can continue to operate. That doesn't appear to be the case. The Chancellor's official twitter feed explicitly states that the scheme will continue "for all sectors and regions of the UK". 

We don't yet know if other changes are anticipated. For example, many businesses have asked for the minimum furlough period of three weeks to be reduced so that they can more easily rotate workers required to be in work. That may be answered when further information is published later this month.

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Edwin Morgan, director of policy at the Institute of Directors.

"A furlough extension will bring significant relief to employers and workers across the country. We’re delighted the Treasury has taken on the IoD’s consistent calls for a flexible furlough. Many firms will be operating far below normal capacity for the foreseeable future. A part-time furlough provides a much-needed launch ramp so businesses can start to get back up to speed. A more flexible approach will allow firms to raise activity levels in tandem with demand, helping to avoid cashflow challenges."”