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Furlough scheme extension: is it too late to save jobs in a second lockdown?

The UK government’s extension to the Coronavirus Job Retention Scheme (CJRS) has come as a welcome relief for many employers as the country faces its second national lockdown.

As in the original scheme, employees on furlough will earn 80% of their total monthly salary up to a value of £2,500.

The cost to employers has been reduced, with the government asking them only to cover National Insurance and pension contributions. Businesses forced to close in England will also be eligible for a monthly grant of up to £3,000.

Yet the second lockdown is still poised to have an impact on businesses and jobs, particularly in sectors such as hospitality and leisure which were the last to reopen after the first lockdown period.

The Dorchester Collection initially reopened on 4 September but now its chief people and culture officer Eugenio Pirri will have to potentially close the hotel once more.

Speaking to HR magazine, Pirri said: “It is so important to safeguard and protect the health and wellbeing of our nation and certainly the extension of the original full furlough scheme is very well received and the right thing to do.

“That said, we still need more to be done regarding further tax breaks and for those who are self-employed.”

As Christmas approaches, Pirri added that he would like to see the introduction of further national programmes to help support businesses that will lose trade given “we know that this season will not be the same.”

Mental health, not just for the sector but for the nation as a whole, will also be a primary concern for HR.

Pirri added: “Ensuring people are seen and their mental health acknowledged is key as being lonely and potentially without loved ones or help during the winter will truly have further destructive results on our society as a whole.”

As an essential business, employees at Severn Trent will be able to continue working throughout lockdown.

Yet its group HR director Neil Morrison is concerned about the impact regulations will have on his workers.

He said: “Whilst for the majority, being on furlough is clearly better than being made redundant I have a significant worry about the impact on people who are told that their life and circumstances are changing on a regular basis.”

As many organisations will have already made plans for the end of furlough, Morrison added: “The challenge for HR teams will not only be navigating the practicalities but also the deep uncertainty and the resultant stress and pressure that many employees will have on their mental wellbeing.”

Further reading:

What should HR know about mass redundancies?

Hot Topic: the politics of furlough

The five things HR leaders should consider in return to work planning

Heather Self, tax partner at Blick Rothenberg, also expressed concern at the little time employers have been allowed to make preparations for this latest u-turn.

She said: “Employers are supposed to agree to any changes to employees’ contracts in advance – how are they supposed to do that at six hours notice at a weekend?

“While it is welcome news that additional support is being offered to businesses during the new lockdown restrictions, the change may well come too late to save jobs.

“The extension is more generous, but the very short notice is a Halloween nightmare for employers and jobs that could have been saved may now be lost.”

The second lockdown and extended furlough scheme is now expected to last until the start of December with the proposed Job Support Scheme (JSS) delayed until the CJRS officially ends.

It also remains open to employers which have not used the scheme before, even if employees joined the company after 19 March.

Additional financial support for statutory sick pay (SSP) is also being offered to businesses.

Self urged the government to outline longer-term plans to account for what the winter months will mean for businesses and their people.

David Hough, partner at Blick Rothenberg, added: “Businesses need to know now what support will be available to them through the winter and not just up until December Some will have spent significant sums readying themselves to trade through the winter, “non-essential” retailers who had invested in inventory for Christmas, have no idea what support will be provided to them for the timeframe that they are closed.”