With the Government saying that existing contracts can be extended whilst continuing to be paid under the Furlough Scheme, I think its a poor decision from Clubs to punt all these players.
Understand fully that football is a cut-throat business but it would cost very little for clubs to extend contracts under the Furlough Scheme and would create a lot of good will.
In principle you'd hope all clubs would do as you've said and give players extensions on a month to month basis as long as furlough remains in place or until we get a definite date on when next season can start. This would ensure players have their income protected at no cost to the clubs rather than finding themselves unemployed at a time when they have no prospect of finding another job.
Sadly though I don't think it's that simple in practice. First of all there are footballing rules on player registrations being required to run window to window, and clubs still haven't been given an update on whether these rules will remain in place or indeed when transfer windows will actually happen this year. We're less than three weeks away from the date the window is supposed to open and in the period where contracts are expiring already. You'd obviously hope those rules will be waived to protect player welfare by allowing clubs to extend contracts month to month as long as furloughing them is an option for clubs who have no income, however as far as I'm aware those rules are made at a FIFA level and I don't know if the SFA would even be allowed to change them within Scotland only. Maybe extending contracts without actually registering them as players is a way round it but I'm not sure.
Additionally, while furlough continues to cover 80% of wages for now, the government have hinted that this may drop to 60% and/or they may expect employers to start making a contribution.
Clubs have got their own survival to think about and they don't want to end up backing themselves into a corner by offering deals thinking they're just protecting players at no cost to themselves, only for FIFA to tell them the contracts have to run longer than they thought, the UK government to tell them they're pulling the furlough rug from under their feet and burdening them with costs they didn't think they have, and the Scottish government to tell them they can't have any crowds at games due to restrictions remaining in place meaning they can't generate the income to cover those costs.
It's terrible for the players, but we could be looking at an existential crisis for clubs here. I'll not rush to judge Dunfermline for this when we don't know yet if there were realistic options to protect their players, although if there were and they've chosen not to use them that's a different story.