CBI: Confirm furlough extension or redundancies could be permanent

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Carolyn Fairbairn, CBI director-general, warned that formal redundancy procedures would have to start soon
John Stillwell/PA Archive/PA Images

Companies could be forced into a position where they have to make people permanently redundant if the government doesn’t confirm any extension of the Coronavirus Job Retention Scheme.

According to the CBI, if companies are to comply with the minimum 45-day consultation period required for redundancies of more than 100 employees, they will need to start those procedures this Saturday (18 April).

So far, the government has only confirmed that its furlough scheme will run for three months, up to 1 June. The scheme pays 80% of an employee’s monthly salary up to a cap of £2,500.

CBI director-general Carolyn Fairbairn told the BBC Today programme yesterday: “What we are saying to government is that firms need to be able to plan.

“These are massive decisions being taken on a day-to-day basis that affect people’s lives and livelihoods, and having that clarity of a 45-day notice period for business is absolutely vital.”

Employers making between 20 and 99 people redundant must also follow a collective consultation period, of at least 30 days.

The Treasury responded to say it had been taking “unprecedented action at unprecedented speed” to support employers.

A spokesperson said: “The scheme is open for an initial three months and we hope conditions will improve sufficiently during this period. However, the chancellor has been clear he will review extending it for longer if necessary.”

The CBI’s warnings come as the Office for Budget Responsibility claimed that UK gross domestic product could drop by more than a third in the second quarter of this year, and 13% for the whole of 2020.

The OBR also warned that unemployment could hit 10% by the end of June, equivalent to more than 2 million more people out of work.

Meanwhile a report from the UN’s labour body, the International Labour Organization, has suggested that business disruption caused by the Covid-19 pandemic could mean the equivalent of 195 million jobs are lost worldwide.

More than four-fifths of workers across the world live in countries operating under full or partial lockdown measures, it said.

The sectors hardest hit worldwide, according to the ILO, are accommodation and food services, manufacturing, retail and business services, and administrative activities.