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Are you ready for furlough to end?

The Government’s furlough scheme that has supported thousands of jobs since April ends on 31st October. So, what happens next?

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At the beginning of October Chancellor Rishi Sunak announced the scheme will be replaced by the Job Support Scheme, which opens in November and runs until April 2021.

The Government have stated ‘The Job Support Scheme is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce. The company will continue to pay its employee for time worked, but the burden of hours not worked will be split between the employer and the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job.’

Employees on the Job Support Scheme will work a minimum of 33% of their hours, with the government paying a third of the hours* not worked and the employer also contributing a third. This will ensure employees will earn a minimum of 77% of their wage.

Important information for the Employer:

Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria

All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme

Grant payments will be made in arrears, reimbursing the employer for the Government’s contribution. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer

Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee

The scheme will be open from 1 November 2020 to the end of April 2021. Employers will be able to make a claim online through Gov.uk from December 2020. They will be paid on a monthly basis

The Government have created a clear example of how the scheme will work for employers.

Beth normally works 5 days a week and earns £350 a week. Her company is suffering reduced sales due to coronavirus. Rather than making Beth redundant, the company puts Beth on the Job Support Scheme, working 2 days a week (40% of her usual hours).

• Her employer pays Beth £140 for the days she works.

• And for the time she is not working (3 days or 60%, worth £210), she will also earn 2/3, or £140, bringing her total earnings to £280, 80% of her normal wage.

• The Government will give a grant worth £70 (1/3 of hours not worked, equivalent to 20% of her normal wages) to Beth’s employer to support them in keeping Beth’s job.

Hours Employee Worked 33% 40% 50% 60% 70%
Hours Employee Not Working 67% 60% 50% 40% 30%
Employee Earnings (% of normal) 78% 80% 83% 87% 90%
Gov’t Grant (% of normal wages) 22% 20% 17% 13% 10%
Employer Cost (% normal wages) 55% 60% 67% 73% 80%

 

*The Government contribution will be capped at £697.92 a month

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