Chancellor reveals new Job Support Scheme after furlough ends

A new Job Support Scheme will begin when furlough ends and financial support for the self-employed is to be extended, the Chancellor has revealed in Parliament this afternoon.

It appears that the new programme may be similar to wage subsidy schemes used in countries like Germany, as suggested in media reports previewing today’s statement.

What are the details?

The Job Support Scheme will last six months from 1 November, the Treasury said, helping to keep staff in their existing roles on reduced hours, rather than facing redundancy.

The Government and employers will top up wages to cover two-thirds of the pay employees are losing from hours being cut.

To be eligible, employees must work at least 33% of their hours. For the remaining hours not worked, the Government and employer will pay one 33% each.

So, officials said that meant employees working at least one third of their hours will receive at least 77% of their normal pay.

Furlough successor

With mass redundancies forecast when the scheme ends on 31 October, Rishi Sunak had come under intense pressure to find a solution. This had intensified since Monday when the Prime Minister announced six months of tightened restrictions, which will have major ramifications for many firms.

Today, Mr Sunak told MPs he would be introducing what is effectively a sequel to furlough, through which five million workers were being paid in July. He insisted furlough had to end and that support had to “adapt and evolve”.

Who will Job Support Scheme apply to?

The new job scheme will apply mainly to small and medium sized enterprises.

Mr Sunak said all employers will be allowed to apply, even if they did not use the furlough scheme and it may be used alongside the job retention bonus.

However, the criteria appears stricter than the furlough programme, at least for larger businesses, who were warned that they will only be covered if their turnover has gone down.  

The Treasury said the new scheme “will protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19.”

What else did Rishi Sunak announce?

It is part of a package of measures announced today, including:

• An extension to the Self-Employment Income Support Scheme “to support viable traders who are facing reduced demand over the winter months, covering 20 per cent of average monthly trading profits via a government grant”
• Self-assessed income taxpayers who need extra help, can also now extend their outstanding tax bill over 12 months from January
• An extension to VAT cut for hospitality and tourism sector until end of March
• Extensions to application deadlines for all coronavirus loan schemes – including the future fund - to 30 November
• Businesses who deferred their VAT will no longer have to pay a lump sum at the end of March next year. They will have the option of splitting it into smaller, interest free payments over the course of 11 months - benefitting up to half a million businesses
• Businesses which borrowed under the Bounce Back Loan Scheme will be offered the choice of more time and greater flexibility for repayments
• Lenders to be enabled to offer Coronavirus Business Interruption Loan Scheme borrowers more time to make their repayments where needed

How was furlough set to change already?

The established furlough scheme was already due to change in October, with Government support set to drop to 60% of wages, at a cap of £1,875, requiring employers to top up the additional 20%.

The follow-up Job Retention Bonus scheme that encourages employers to keep on workers by providing a one-off payment of £1,000 for each furloughed employee brought back will also come into play.

How can IRIS help?

To ensure our customers are always compliant with ongoing changes, we’re continuously adapting our software.

You can view all our payroll offerings here to find the perfect solution for your organisation.

Take a look at our various HR solutions here to discover how you can support those employees returning from furlough.