Chancellor Rishi Sunak has announced the scheme will cover employee wages until end of October
Mr Sunak confirmed that employees unable to work due to coronavirus will continue to receive 80% of their monthly wages up to £2500 for an extra four months.
However, he said, as of August, the government will ask companies to share part of the cost of the scheme.
The chancellor explained the scheme would continue for all sectors and regions of the country but with greater flexibility to support the transition back to work. Employers currently using the scheme would be able to bring furloughed employees back part-time, he added.
Chancellor Rishi Sunak said: "Our Coronavirus Job Retention Scheme has protected millions of jobs and businesses across the UK during the outbreak - and I've been clear that I want to avoid a cliff edge and get people back to work in a measured way.
"This extension and the changes we are making to the scheme will give flexibility to businesses while protecting the livelihoods of the British people and our future economic prospects."
Government statistics show that the job retention scheme has protected 7.5m workers and almost one million businesses so far.
Jo Keddie, partner and head of employment at Winckworth Sherwood, welcomed the Chancellor's announcement. She said: "Many will also be glad of flexibility for part-time working as the Job Retention Scheme enters its next phase, beginning in August, although employers may still face some difficult practical choices as to how to put that into practice and how best to balance furlough arrangements with part-time working for employees where possible. The wider guidance issued this month surrounding health and safety requirements for businesses in different sectors will still be of crucial importance to enable a safe and protected environment for those being required to return to the workplace.
"Overall, the Chancellor's comments stressed the balance of responsibility between the government and employers. We now await the detailed guidance of the Chancellor's plans, but this will surely be one of the key themes as the scheme evolves in the coming weeks as the Government seeks to increase economic activity across the UK."
The government today revealed statistics that show businesses have received over £14bn in loans and guarantees during the crisis. This includes 268,000 Bounce Back Loans worth £8.3bn, 36,000 loans worth over £6bn through the Coronavirus Business Interruption Loan Scheme, and £359m through the Coronavirus Large Business Interruption Loan Scheme.
The Chancellor first announced the Coronavirus Job Retention Scheme on 20 March and it was later extended until the end of June. Last week, HMRC opened its Self-Employed Income Support Scheme (SEISS) alongside Bounce Back Loans for small businesses.
