The New Job Support Scheme
Earlier today, Rishi Sunak announced the new Job Support Scheme. As the current furlough scheme comes to an end on 31st October, the new six months scheme is set to replace it, focusing on bringing employees back to work rather than keeping jobs open only inside the scheme.
The new scheme will support the wages of those working, with the government subsidising the pay of employees who are working fewer than their normal hours. To be eligible, employees must be working at least a third of their hours, with the employer paying for those hours worked.
There has been some confusion with regards to the amount the government would contribute, initially thought to be two thirds, but now according to the government website only one third.
The government and the employer will pay a third each for the hours employees cannot work up to a maximum cap; the result is that an employee will receive 77% of their wages. So, someone earning £2,000 per month previously but who is only working 50% of their hours, would get £1,000 normal pay, plus £333 from their employer, plus £333 from the government, making a total of £1,666. This means employees who can only work shorter hours, will still be paid two third of the hours for the hours they cannot work. The grant will be capped at £697.92 per month.
All small and medium sized businesses will be eligible as well as larger businesses if their turnover has fallen during the pandemic. It is further open to employers even if they have not previously used the furlough scheme
Comparing this to the start of the pandemic, the government will now pay a maximum of 22% of an employee’s wages, rather than 80%. The focus now is clearly on “evolving” the way in which jobs are supported. Noticeable here the emphasis is on “viable” jobs, in line with the Chancellor’s earlier statement that “not all jobs can be saved”.
The self-employed grant is being extended on similar terms, covering three months’ worth of profits from November to the end of January. It will cover 20% of average monthly profits up to a total of £1,875.
Are these packages enough to keep the economy stable during the winter months? The Government has confirmed that the social distancing measures announced on Tuesday will be in place for at least 6 months. Will this package be enough to ensure jobs in the most severely hit sectors, namely hospitality and arts?
Henriette Kaerger
Please note that the information contained in this article was correct at the time of writing. There may have been updates to the law since the article was written which may affect the information and advice given therein.
