Furlough replacement – details of the new Jobs Support Scheme

Wake Smith Solicitors 30 September 2020

The Chancellor Rishi Sunak has unveiled the next step in the support package for employers and employees.

The Jobs Support Scheme, which forms part of the wider “winter economy plan” will replace the furlough scheme which is due to come to an end on 31 October, and will see employees be paid a minimum of 77% of their normal salaries for six months between 1 November 2020 and 30 April 2021.

Briony McDermott, employment solicitor at Wake Smith, looks at the details.

The Scheme aims to prevent large scale redundancies, but would "support only viable jobs" in an effort to get employees back to work as opposed to keeping jobs open that only exist because the Government is continuing to subsidise wages through the current furlough scheme.

Mr Sunak said the Government will directly support the wages of people in work, giving businesses who face depressed demand the option of keeping employees in a job on shorter hours, rather than making them redundant.

Briony said: “Under the scheme, the Government will subsidise the pay of employees who are working fewer than normal hours due to lower demand for work of a particular kind.

“The scheme will apply to staff who can work at least a third of their usual hours and employers will pay staff for the hours they do work.

“For the hours employees can't work, the government and the employer will each cover one third of the pay that would have been lost by reducing their working hours, with the maximum grant from the government being capped at £697.92 per month.”

Mr Sunak acknowledged that he cannot save every business or every job, but that the new scheme should “deal with the real problems businesses are facing now.”

All small and medium sized businesses will be eligible for the scheme, with larger businesses being eligible if their turnover has fallen during the pandemic.

As this is a completely new scheme, it will be open to employers even if they have not previously utilised the furlough scheme.

Employers bringing furloughed staff back to work on shorter hours will be able to claim both the Jobs Support Scheme and the Jobs Retention Bonus under which employers can claim a payment of £1,000 for previously furloughed employees who are retained on certain job conditions until at least the end of January 2021. 

Further measures announced by Mr Sunak included an extension to the cut in VAT for hospitality and tourism companies from 20% to 5% until March 2021.

The VAT deferral scheme for UK VAT-registered businesses who deferred VAT payments between 20 March 2020 and 30 June 2020 is now payable over 12 interest free instalments over the course of 11 months from 31 March 2021.

Small businesses who took out "Bounce Back" loans can use a new ‘Pay as You Grow’ flexible repayment system, meaning that monies borrowed can be repaid over 10 years instead of the original six year term. The extension also applies to the Government guarantee on loans taken out through the Coronavirus Business Interruption Loan Schemes.

For further advice on employment law at this time contact our Employment team on 0114 266 6660.

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