Next month the Coronavirus Job Retention Scheme will be replaced by the Job Support Scheme. Here what we know about this new initiative.
UPDATE 2 - 05 November 2020: Rishi Sunak, the Chancellor of the Exchequer, has announced that the furlough scheme will be extended until the end of March 2021. Employees will receive 80% of their usual salary for hours not worked, up to £2,500 a month.
UPDATE 1 - 02 November 2020: Following the announcement on 31 October of a second lockdown in England due to start on 5 November, the furlough scheme (Coronavirus Job Retention Scheme), which was to be terminated in October, has been extended to at least the end of November 2020.
First of October sees changes to the conditions of the Coronavirus Job Retention Scheme (known as the furlough scheme). As of today, only 60% of furloughed staff salaries will be covered by the government's scheme, down from 80% when it was first introduced.
The scheme will end completely at the end of the month, when it will be replaced by the Job Support Scheme, the terms of which are even less generous.
The government has published some details on how the new scheme, which is due to run for 6 months, will work.
Employers will need to apply for the scheme online. Payments will be made in arrears. This means that the first government contributions will be received in December.
The Government will pay a third of hours not worked, up to £697.92 a month, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.
Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.
One of the conditions of the scheme is that the employees to be covered by it must work at least 33% of their normal hours for the first three months of the scheme (that minimum threshold is likely to rise after that). Those hours can be done flexibly and employees will be paid at their normal rate for that time.
The scheme applies to the hours not worked by the employee, which means that the employer will pay at least 55% of the employee's full wages, even if they only work 33% of the time.
This will potentially not make financial sense for already cash-strap companies, forcing employers to face tough decisions, although rather than outright, expensive, redundancy, leadership teams wanting to retain staff and their skills for the organisation, have options short time working, unpaid leave or job sharing that they can consider.