The Chancellor has today (24 September) announced a new form of financial support for businesses and employees affected by the COVID-19 pandemic.
The furlough scheme, under which employees receive up to 80% of their normal wages (capped at £2,500), is due to finish at the end of October and the government has been coming under pressure to extend the scheme, particularly in view of the latest restrictions announced this week which are placing further pressure on businesses.
The Chancellor’s announcement draws a distinction between the circumstances the country found itself in back in March, where businesses were ordered to close and everyone told to stay at home, whereas now many businesses are open.
As a result, a new type of scheme will operate from 1 November 2020 for six months which is intended to support businesses in bringing staff back to work and keeping them in viable jobs. If the business is affected by the pandemic and employees are required to work fewer hours because of this, a claim can be made to the Job Support Scheme to avoid the need for the employer to make redundancies.
Under the new scheme, provided that employees work at least 1/3 of their normal working hours, and are paid as usual for the hours worked, then the government will also pay 1/3 of the employee’s usual salary for the time not worked, capped at £697.92 per month, and the employer must pay the remaining 1/3, at the employee’s usual rate. The employee will forfeit the remaining 1/3 for the hours not worked.
So, by way of example, if an employee earning £2,000 per month worked half their hours, they would receive £1,000 normal pay from the employer in the normal way. They would then get £666 from the employer for the hours not worked, forgoing the balance. The employer will then be able to reclaim half of that sum (£333) from the government scheme.
All small and medium size businesses will be eligible to claim under the job support scheme. Larger businesses will be able to claim, but only where their turnover has fallen as a result of the pandemic. Employers do not need to have previously made a claim under the furlough scheme or to have previously furloughed that employee. This therefore gives the opportunity to ‘share the burden’ amongst all staff.
It will also be possible to make a claim under the job support scheme as well as claim £1,000 per employee from the job retention bonus, for each member of staff brought back from furlough and still retained by the end of January.
There will be a similar scheme available to those who are self-employed.
Full details are still to come and we will update you as soon as we have further information.