New Job Support Scheme to replace furlough

The Chancellor announces his revised plans to support employers and employees post-furlough

With the Coronavirus Job Retention Scheme due to end on 31 October, and restrictions still set to be in place nationwide which will continue to impact upon businesses across all sectors, Chancellor Rishi Sunak has announced a new support package for employers in the shape of the new Job Support Scheme. The new scheme will run from 1 November 2020, meaning it backs on to the end of and replaces the concept of furlough, and will continue to run until the end of April 2021.

Under the Job Support Scheme, employers will continue to receive support in paying employees’ wages, but it will operate in a different way to the furlough scheme and is available in addition to the job retention bonus payments. Employers need not have used the furlough scheme before in order to have access to the new Job Support Scheme.

Since it was first announced on 24 September, the Chancellor has made some amendments to how this will operate. The key aspects of the scheme are now as follows:

For businesses who are being required to close as a result of local or national restrictions due to COVID-19, the Government will contribute two thirds of the normal wages for any employees, up to £2,100 per employee per month. Employees must be off work for a minimum of seven consecutive days to be eligible. Employers will still be required to pay Class 1 employer NICs or pension contributions in relation to the amount paid.
For businesses who remain open, it will only be available in respect of employees who are working at least 20% of their normal working hours, for which they will be paid as normal. This has been reduced from the 33% originally set down.
For each hour the employee would normally have worked under their contract but doesn’t in fact work, the government will pay 61.67% of the employees pay. This will be capped at £1,541.75 per month. This is a significant increase on the originally announced government contribution cap of £697.92.
In addition to the government contribution, employers will be required to contribute 5% of wages for the hours the employee doesn’t work (but ordinarily would have). This is quite a reduction from the original one third of unworked hours which employers were being asked to pay. The new 5% contribution will be capped at £125 per month for each employee.
This means that employees will take home at least 73% of their normal pay for only working 20% or more of their normal hours.
It will be available to employers in all sectors, and to all small and medium-sized businesses. Large business will need to meet certain criteria relating to the impact of COVID-19 on their business in order to access the scheme.
These payments will not be available towards any notice or redundancy payments. Employees should be moved out of the new scheme if they are to be made redundant.
Employees can be rotated on and off the scheme as required, as long as each claim period relates to a span of at least 7 days, and each period must be agreed in writing with the employee in advance.
The grants will be paid in arrears and can be claimed online from 8 December 2020. They will not include Class 1 employer NICs or pension contributions, which must still be paid by the employer.

Further information is still awaited relating to the full practicalities of the scheme, but information has been published on the government website in the form of a factsheet. Employers should be considering now if and how they may be able to make use of this moving forwards after the furlough scheme ends.