Businesses given a further lifeline with the extension of the Coronavirus Job Retention Scheme should use the time to plan carefully for life after furlough.
Employment lawyer Sally Morris said firms had been given a boost by Chancellor Rishi Sunak’s budget, which saw the furlough scheme extended by five months, until the end of September – with employers expected to contribute from July onwards.
Although people were expecting large parts of the economy to be open again by the summer, it will take time for businesses to bring everyone back to work, while many will still have to make difficult decisions about redundancies that were put on hold by the furlough scheme.
Ms Morris, partner and head of employment at Shropshire law firm mfg Solicitors, said: “Mr Sunak’s announcement will be welcomed by many businesses here in the county in the same way previous extensions to the Coronavirus Job Retention Scheme were, especially for those contemplating the possibility of commencing redundancy consultations.
“However, it is clear the Government is starting to look ahead to life after Covid-19. Changes to the furlough scheme will be coming into effect from 1 July, as well as the country gradually coming out of lockdown, and therefore businesses will need to review arrangements for those who are furloughed, to plan whether there needs to be any redundancies or restructures, as well as deciding how to reintegrate furloughed employees back into work.”
Under the Coronavirus Job Retention Scheme, workers who are furloughed are entitled to 80% of their normal wages, capped at £2,500 per month.
At the end of January 2021 there were 4.7 million workers on furlough and altogether, 11.2 million jobs had been supported by the scheme. Furlough has been extended from 30th April to 30th June 2021 but from 1st July 2021 to 30th September 2021, employers will be required to share some of the costs.
Ms Morris added: “The furlough scheme has avoided millions of redundancies, but the question for employers now is how to get back to some form of normality in the next couple of months. They will need to use the time to work out how sustainable these jobs are once the funding is reduced or ends and take steps to ensure their businesses can survive without it.”