COVID-19 – Beyond Furlough: Rishi Sunak’s Job Support Scheme
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With the Coronavirus Job Retention Scheme set to end in October, the Government have been met with anxieties in recent weeks regarding an expected rise in job losses.
Speaking from the House of Commons earlier this week, Chancellor of the Exchequer Rishi Sunak announced plans to launch a new support package designed to prevent the country from facing mass unemployment figures as we now move into the winter months.
What is the new Job Support Scheme?
Unveiled as part of the Government’s winter economy plan, the new Job Support Scheme will see the Government make contributions towards the wages of employees who are working fewer hours than they normally would as a result of the Coronavirus pandemic.
Within this scheme, employers will continue to pay staff their usual wages for the hours they work, and for hours not worked, their wages will be topped up with a one-third contribution from the Government and a one-third contribution from the employer.
Am I eligible for the Job Support Scheme?
In order to qualify for financial support through the Job Support Scheme, an employee must not be on a redundancy notice. This clause has been designed to encourage companies to retain as many members of staff as possible in a bid to protect jobs as much as possible.
For the first three months of the scheme (November 2020 – January 2021), eligible employees will be required to work at least 33% of their normal contracted hours. It has also been announced that the Government will make plans to review whether to increase the threshold after the initial 3-month period.
Offering a degree of flexibility to staff and business owners, employees will be able to “cycle on and off” the scheme, and they will not be required to work the same patterns each month.
The scheme will be open to all small and medium-sized enterprises (SMEs), and employers will need to have a UK bank account and be part of PAYE. Some large businesses may qualify for support, however they will need to be able to show the adverse effects of COVID-19 upon profits, with at least a one-third drop in turnover due to the pandemic.
How much should employees expect to receive?
Employees will be paid by their employer for every hour worked as normal. For every hour not worked, their wage will be topped up with a one-third contribution from the employer, and a one-third contribution from the Government (capped at £697.92 per month – much lower than the £2,500 cap on the original furlough scheme).
With employees being required to work at least one third of their standard contracted hours, the Job Support Scheme will cover wages for a maximum of 66.6% of hours not worked, therefore the government contribution covers up to 22% of full pay.
As a result, taking into account the pay received for hours worked, as well as state and company subsidised wages for down time, employees signed onto the scheme will receive at least 77% of their usual pay (unless affected by the Government cap of £697.92).
If an employee is able to work 33% of their normal working hours, the Government grant would therefore amount to 22%, and the employer contribution would be 55%.
When will the scheme begin?
The new Job Support Scheme will be launching on 1st November 2020, and is set to run for six months.
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