What happens after furlough ends?

Job support scheme

The government’s furlough scheme which was introduced earlier this year and which currently requires employers having to pay 20% of employees’ salary is to end this month.

It is being replaced by the Job Support Scheme which will run for 6 months from 1 November 2020.  The Job Support Scheme requires employees to work at least a third of their contractual hours with the government and the employer topping this up by each paying one-third of the remaining wages i.e., the employee would receive at least 77% of their salary.  The government will pay a third of hours not worked up to a cap of £697.92 per month. 

The scheme is 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 rather than making them redundant.

Employees must be on their employers’ payroll on or before 23 September 2020 and for the first 3 months must work at least 33% of their normal hours. 

All employers will be eligible for the Job Support Scheme even if they have not previously used the Coronavirus Job Retention Scheme.  Employers who are large businesses will have to undergo a financial assessment test.  However, there is no such test for small and medium size enterprises.

In addition, employers can access the Job Support Scheme along with the existing Job Retention Bonus which currently offers a £1,000 one-off taxable payment for each furloughed employee kept on until at least 31 January 2021.

However, it may be that many businesses will simply not be able to afford to pay one-third of their employees’ wages as they are already struggling financially and may, unfortunately, have to consider job-cuts or, if possible, a reduction in hours where temporary contracts could be agreed with employees to provide clarity.

We’ll be reporting in due course with regard to the Chancellor’s proposed announcement today (Friday 9th October) surrounding the next stage of the job support scheme. This, in the event, that further local lockdown restrictions are put in place and the enforced closure of some businesses is necessary. UPDATE: The Chancellor announces Job Support Scheme extension for businesses that may be forced to close.

Author: Lisa Branker, Employment Law Solicitor, Richard Reed Solicitors

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Tel: 0191 567 0465 | [email protected] | www.richardreed.co.uk

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