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Is a permanent furlough scheme a possibility for the UK?

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The Trade Union Congress (TUC) has repeatedly called on the government to introduce a permanent furlough scheme to deal with future events or crises where government financial support is needed. The aim of the scheme would be to protect workers and businesses by saving jobs and protecting incomes.

The TUC has proposed a UK scheme should look at various European schemes already in existence that require businesses to demonstrate a temporary reduction in demand for products or services in order to access the scheme.

Workers would receive 80% of wages while on the scheme and a guarantee provided that no worker would receive less than the minimum wage for their normal working hours

The TUC has suggested that there should be a time limit on the use of the scheme (but extensions possible in limited circumstances) to encourage workers to return to work when able to do so.

There are 23 countries from the Organisation for Economic Co-Operation and Development with a short-time working scheme that was in place prior to COVD-19. Following the pandemic, the UK may look to follow a similar approach.

There is an imminent risk that when the furlough scheme comes to an end in September 2021 there will be a significant number of jobs at risk and subsequent redundancies.

Introducing a short-time working scheme would enable businesses and individuals to better plan for the future and provide a form of protection in case of an emergency.


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One issue with the Coronavirus Job Retention Scheme was the extent of fraud linked to the Scheme which was in part linked to the speed with which the scheme was drawn up.

Having a robust structure put in place for a permanent furlough scheme capable of being drawn upon when necessary could look to avoid the same fraudulent actions. 

There is no suggestion from the government that a permanent furlough scheme will be brought in to effect or that there will be any further extensions to the furlough scheme.

Moreover, with the vaccine programme now well underway, social distancing measures eased and the government promoting a gradual return to the workplace, it seems unlikely that the government will look to extend the furlough scheme any further.

Introducing a permanent furlough scheme would also be at a substantial cost to the government and the taxpayer.

However, in March 2021 it was announced that the furlough scheme was being extended until 30 September 2021 and it has been extended five times since its introduction, so we cannot be certain that there won’t be further extensions or a permanent furlough scheme introduced.

The TUC has put forward a number of conditions in order to access a scheme, including that businesses should commit to paying their corporation tax in the UK and set out a plan for fair pay and decent jobs.

This is something worthwhile for businesses to bear in mind but there isn’t anything specific that businesses can do to prepare at present, on the basis that there is no guarantee that a permanent furlough scheme will be enacted.

 

Stephen Moore is partner and head of employment at Ashfords