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Lockdown extension punishes those employers with workers on furlough

The Government’s recent extension of the lockdown until 19 July is particularly punitive for those employers who have been using the Government's furlough scheme to support their employees during lockdown, notes Robert Salter.

Under the furlough scheme, employers are required to pay 10% of the employees’ wages (assuming the employee is on the 80% furlough pay rate) Employer National Insurance Contributions and employer pension contributions.

Despite the recent extension to the lockdown, the Government has not announced any additional or new support in this area. This means that employers – already under severe financial pressure in many cases because of the ongoing restrictions impacting their businesses – now need to find these additional costs for at least another four weeks at a time when their income (if any) remains severely restricted.

However, those employers who have not been paying their staff during the lockdown – e.g., because employees were typically on zero hours contracts and the employer decided not to support these workers via the furlough scheme – can avoid these costs which seems hardly fair.

While it is inevitable that there will be winners and losers with the Government’s support measures, the Government needs to review this situation closely and consider whether more targeted support should be provided to those employers with staff on furlough.

If the Government is serious about “levelling up” and ensuring that the economy “bounces back better” it is vital that support is provided to the best employers.

Would you like to know more?

If you would like to discuss the above or how it may affect you, please get in touch with your usual Blick Rothenberg contact or Robert Salter, using the details on this page.

For any press queries, please contact David Barzilay whose details are on this page.

You can also visit our Coronavirus: Practical Guidance hub for more information.

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