The furlough scheme, or as it is formally known – the Coronavirus Job Retention Scheme, is currently set to continue until 31 October 2020.
We provided some information about it here. However, looking elsewhere in Europe, is it possible that the United Kingdom may follow Germany's lead and look to extend the furlough scheme for up to two years?
In response to the economic crisis that has arisen from the pandemic, Angela Merkel is expected to announce the extension of Germany's furlough scheme known as Kurzarbeit.
They will decide on the extension on 25 August 2020 but this is supported by the Finance Minister, Olaf Scholz who agreed that allowing companies to have workers working on a part time basis whilst claiming the rest of their costs could be beneficial to help companies and businesses and confirm that "… we’ve got your back for the long haul in this crisis, so that no one is being let go without need".
If Germany leads the way and extends its furlough scheme, there is a question as to whether other countries will follow suit and this could definitely have its pros and cons.
No doubt it would support businesses who require financial help and it will certainly keep individuals employed for longer on that basis.
However, could it also do little more than prolong the inevitable whereby companies are placing employees on furlough for the foreseeable, knowing that once the scheme is over they will be making those individuals redundant for a whole host of reasons? In this case, it could be tricky and could even be considered as abusing the furlough system which is something that companies ought to be wary of.
Another thought raised by Dean Sadler, CEO and founder of recruitment software provider Tribepad in speaking to HR Grapevine is that ultimately the younger generation will suffer the consequences of this scheme.
Whilst many of us think that they may be the ones benefitting from it at the moment as they are being kept in jobs – it is that generation that may end up shouldering the UK's debt in repaying for the furlough scheme, which has already cost approximately £34.7billion.
We have no doubt that the furlough scheme has been a welcome reprieve for many individuals and businesses during these trying times, but whether it should continue to be extended as Germany is doing is something that should be considered very carefully. Is it the only way to assist the economy or are there other options?
We do not have the answers, but we are certainly ready and available to support both employers and employees with the post-furlough transition as may be required.
Please do get in touch with us for a no-obligation initial conversation. Contact us on 01245 228141 or via e-mail
This is not legal advice; it is intended to provide information of general interest about current legal issues.