The announcement by the chancellor Sunak, earlier this week for the extension of the furlough Scheme, is welcomed by the all the sectors of the businesses especially the manufacturing industry as the jobs of millions of employees will be secured.
The extension will cost around £48 billion according to the Resolution Foundation but the government is determined to help the people in this time of crisis.
The high street workers and the manufacturing sector were hard hit by the Covid-19. The car industry, for example, had to put its employees on furlough. While talking to a second hand car dealer it was revealed that they had to furlough most of their employees due to lack of business and some were even forced to close their businesses.
The furlough extension is extended till July with a grant of 80% of the salary up to a maximum of £2500 however the chancellor is considering further extending the furlough payments till October. This means that the employers can furlough their employees for further 4 months, however instead of getting 80% of the salary up to £ 2500, they will be paid 60% of their salary. The employers are asked to top up the salaries if they want to.
The extension will safeguard the rights of the employees. Under the employment law, the company must start informing their employees within 45 days of any changes. In the current situation this point is very important for those industries whose businesses are significantly affected by the Covid-19 such as high street retailers, manufacturers and the restaurant chains. Since the production lines are closed, the manufacturing businesses would have had to make their employees redundant. If the furlough scheme was to expire in July, employers would have to start informing the employees about the redundancies by now. The redundancies at this point would affect their businesses in particular and will have a huge impact on the economy at large.
Part time work and the furlough Scheme. Although, while on the furlough Scheme the employees cannot work for their employers, however the government has confirmed that the employees can find work somewhere else for some added income. The manufacturers are however trying to persuade the government to allow their workers to start part time work so they can start the production. The start of the production would mean that the employers can top up the furlough grants for their employees.
The details of the extension of the furlough Scheme will come by the end of this month. But the fact that the furlough grants are promised till Oct has satisfied many employees financially and it has also helped secure their jobs.
If you want further information on the Furlough Scheme, Income Tax and Self Employed Income Support Scheme please contact Taxaccolega Chartered Accountants based in Croydon and Southall on 02081270728 or email us at info@taxaccolega.co.uk.