UK chancellor, Rishi Sunak announced that the furlough scheme will end as planned on 31 October 2020. In its place, the Government have created the Job Support Scheme which will start on 1 November 2020.
24 September 2020
Today (24 September) the UK chancellor, Rishi Sunak announced that the furlough scheme will end as planned on 31 October 2020. The reason for this is that they believe the support must “adapt and evolve”. In its place, the Government have created the Job Support Scheme which will start on 1 November 2020.
The scheme is there to primarily support small and medium firms, all of which are eligible. Larger businesses will also be eligible so long as they can provide evidence that their turnover has fallen during the Covid-19 crisis. This is because the government now believe that targeted support is required rather than a blanket support approach such as the furlough scheme.
The scheme is open to all employers even if they have not previously used the furlough scheme.
The self-employed grant will also be extended to self-employed people on similar terms.
The scheme will run for six months ending in May 2021.
The government will subsidise wages for employees who are working fewer than normal hours due to reduced demand. To be eligible, employees must work a minimum of 1/3 of their normal hours.
For the remaining hours not worked, the government and the employer will pay 1/3 of the lost pay each. The government grant is subject to a cap of £697.92 per month.
For as long as employers are receiving money for employees on this scheme, they will not be able to issue redundancy notices to these employees. Larger companies who use this scheme will also be restricted on what capital distributions they can make to shareholders.
The chancellor announced earlier this year that for employees who were furloughed and then brought back to work there would be a payment of £1,000 made to employers for each employee who remains in employment following a period of furlough.
The payment will be made in February 2021 so long as the employee remains employed between 1 November 2020 and 31 January 2021.
Today it was confirmed that employers can still claim this bonus on top of the Job Support Scheme so long as they meet the above qualifying rules.
Commenting on the replacement scheme, Head of Employment, Robert Holland stated:
“While it had been widely anticipated that a replacement for the Furlough scheme would be found, the amount of government support for workers is perhaps a lot less than struggling businesses were looking for. At best, it would seem that the Government will pick up about 22% of an employee’s monthly salary, with around 55% coming from the employer, and the shortfall to be borne by the employee. With those sorts of ratios, it may well be that the unfortunate option of redundancies will still be taken by many employers.”
If you need any advice on the scheme or with employment advice surrounding staffing, please contact our team.
Partner, Head of EmploymentRobert Holland