I don’t think even the most alert of commentators quite expected Chancellor Rishi Sunak’s announcement yesterday extending the Coronavirus Job Retention Scheme (CJRS) to the end of October.

The scheme rules will remain ‘as is’ until the end of July with changes (due to be announced by the end of the month) from August to bring new flexibility in how employers can utilise the scheme. This will include allowing furloughed workers to be able to return to work part-time. This flexibility is likely to be a vital component in allowing businesses to manage a gradual return to work in line with changes in demand and to allow time for new Covid19 related health and safety measures and ways of working to be put in place to meet the requirements of the ‘new normal’.

From an employee perspective, furloughed workers will continue to receive 80% of their current salary, up to £2,500 per month, albeit that from August, employers will be asked to share the cost with the Government by paying a percentage towards the salaries of their furloughed staff if they return to work part-time. The Chancellor also noted that the government will explore ways it can support furloughed workers who wish to learn new skills or do additional training.

Particularly with the extended length of furlough, employers will need to think carefully about how they manage holiday leave for furloughed workers. Holiday entitlement continues to accrue during furlough and whilst there are new measures to allow holiday to be carried forward for up to two years, it may make more sense for some businesses to require furloughed employees to utilise at least some holiday during the furlough period (albeit that they will need to be paid at full pay for holidays they are entitled to under the Working Time Regulations).

The timing of yesterday’s announcement was less surprising than the content – any employers who were looking at making large scale redundancies in anticipation of the CJRS scheme coming to an end at the end of June would in many cases have had to start collective consultation by 15 May. The extension will allow at least some employers to wait a little longer to assess the longer-term sustainability of their business as the impact on the wider economy unfolds.

In terms of the operation of the scheme, HMRC still haven’t published details about how to correct any mistakes in prior claims yet, but on the plus side, it’s now possible to save a claim part way through submission which will be a relief to many employers and agents who’ve had to start inputting again from scratch if a claim was interrupted or an internet connection lost at a crucial moment.

The job retention scheme has been (and will clearly continue to be) a massive boost to businesses, charities and employees across the UK, with new statistics published on 12 May revealing that the scheme has protected 7.5million workers and almost 1 million businesses. The new flexibility of the scheme from August should help businesses to manage a transition back into increased operations.

At Sagars, we’re keen to support our clients in looking forward with their businesses and seeking the opportunities beyond the immediate focus on survival which this crisis may bring. If ever there was a time to reexamine why, how and what you do as a business, then it’s now. There’s no doubt that the extension of the CJRS scheme will help to give many more businesses the breathing space to do just that. If you’d like our help, just get in touch with your usual Sagars contact or Ali Jones.

Ali Jones
Ali Jones
Consulting & Corporate Finance Partner
Ali provides strategic business planning, consulting and corporate finance advice and support to SMEs, professional practices and not-for-profits. Ali's profile >