The furlough scheme will be extended for an additional month, according to Chancellor Rishi Sunak.
The scheme, which means thousands of workers around the UK continue to be paid while not working, was set to expire at the end of March but will now be extended for by a month.
It means workers will continue to be paid 80% of their salary for hours not worked until the end of April.
The scheme's extension suggests that the Government believes the economy is still struggling with the impact of the coronavirus pandemic. It has been suggested by some economists that once the furlough scheme ends many businesses will be forced to lay off staff.
Along with the change to the furlough scheme, Mr Sunak also extended the Government loan scheme, which will now run until the end of March to help support businesses.
The Chancellor said: “Our package of support for businesses and workers continues to be one of the most generous and effective in the world – helping our economy to recover and protecting livelihoods across the country.
“We know the premium businesses place on certainty, so it is right that we enable them to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support, as well as implementing our plan for jobs.”
Employers will only be required to pay wages, National Insurance Contributions (NICS) and pensions for hours worked; and NICS and pensions for hours not worked.
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