New Job Support Scheme announced

Rishi Sunak announces new scheme to replace the 'furlough scheme'

New Job Support Scheme announced
Rishi Sunak announces new scheme to replace the 'furlough scheme'

Chancellor Rishi Sunak has announced a new Job Support Scheme starting in November to replace the 'furlough scheme' which will come to an end at the end of October. This new scheme will run for 6 months.

The new scheme involves the government supporting the wages of people in work, giving employers the option to keep people in work on shorter hours, rather than make them redundant. The measures were set out by the Chancellor in a statement to the House of Commons to try to save 'viable' jobs.

The Job Support Scheme will be launched for employees working at least a third of their normal hours, who are being paid for that as normal. The government and employers will jointly increase their wages to cover two-thirds of their lost pay and the employee will keep their job. Important points to note about the scheme:

  • To be eligible, employees must have been on the employer's Real Time Information submission on or before 23 September 2020;
  • The minimum 33% threshold hours for which an employee must work may be increased in months 4-6 of the scheme;
  • Working patterns can vary, but each short-time working arrangement must cover a minimum period of seven days; and
  • The government's grant will not cover Class 1 employer NIC or pension contributions, although they remain payable by the employer.

All small and medium-sized businesses are eligible, but larger businesses must show their turnover has fallen during the crisis. Employers can use it even if they have not previously used the furlough scheme it replaces.

Businesses will not be able to issue redundancy notices to employees on the Job Support Scheme - and there will be restrictions on capital distributions to shareholders while they are in receipt of money for their workers on this scheme.

How would the scheme work? If an employee works reduced hours the employer pays for that at the full rate. Then the employer and government pay one-third of the lost pay each (up to the cap).

So for someone on £2,000 a month working half their hours, they’d get £1,000 normal pay plus £333 extra from their employer and £333 from the government.

The employer can also claim the job retention bonus - as long as they qualify for that.

If you are affected by any of the above and would like to have a confidential discussion about this or would like further information, contact our Employment Team on 01733 882800 or email info@hcsolicitors.co.uk.

Author: Alison Banerjee, Associate Solicitor

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This article has been prepared for general interest and information purposes only; it does not constitute legal advice and should not be relied on as such. While all possible care has been taken in the preparation of this article, no responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by the firm or the authors.