End of furlough scheme – what does it mean for employers and employees?

Update 03/11/2020

The Coronavirus Job Retention Scheme has been extended for a month with employees receiving 80% of their current salary for hours not worked.

The aid, also known as the Furlough scheme, will remain open until December, with employees receiving 80% of their current salary for hours not worked, up to a maximum of £2,500. Under the extended scheme, the cost for employers of retaining workers will be reduced compared to the current scheme, which ends today. This means the extended furlough scheme is more generous for employers than it was in October.

Under the new support scheme, employees could work one day a week and earn up to 73% of their wages. It’s designed to help employees working for businesses that have shut down in lockdown areas.

What is the Job Support Scheme?

The Job Support Scheme provides different types of support to businesses:

• Businesses that are operating but facing decreased demand can get support for wages through JSS Open.
• Those businesses that are legally required to close their premises as a direct result of coronavirus restrictions set by one or more of the four governments of the UK can get the support they need through JSS Closed.

JSS OPEN

Many employers can operate safely but continue to face reduced demand, so they may need extra support over the winter to help keep their employees attached to their workforce. For these employers, the Job Support Scheme, through JSS Open, will give employers the option of keeping their employees in a job on shorter hours rather than making them redundant.

Requirements:

1. The employee will need to work a minimum of 20% of their usual hours (that is 7.5 hours in case an employee is working 37.5 hours a week)
2. The employer will continue to pay them as normal for the hours worked.

How much will the employee get?

The employee will receive 66.67% of their normal pay for the hours not worked – this will be made up of contributions from the employer and from the government. The employer will pay 5% of reference salary for the hours not worked, up to a maximum of £125 per month, with the discretion to pay more than this if they wish. The government will pay the remainder of the 61.67% of the reference salary for the hours not worked, up to a maximum of £1,541.75 per month. This will ensure employees continue to receive at least 73% of their normal wages, where they earn £3,125 a month or less.

JSS CLOSED

Employers who have been legally required to close their premises as a direct result of coronavirus restrictions set by one or more of the four governments of the UK can apply for JSS CLOSED.

Each employee who cannot work due to these restrictions will receive two-thirds of their normal pay, paid by their employer and fully funded by the government, to a maximum of £2,083.33 per month, although their employer has discretion to pay more than this if they wish.

Who can claim it?

Employers can claim the scheme for their businesses, so employees cannot claim the aid directly. Employees should get their salary from their employer, and the employer can claim government funding back later.

Eligible employers will be able to claim the Job Support Scheme grant for the employees who were on their PAYE payroll between 6th April 2019 and 11:59pm on 23rd September 2020.

Employees can be on any type of contract, including zero-hours or temporary contracts. Agency workers are regarded as employees of an employment agency for the purposes of this scheme, provided they are employees for Income Tax purposes.

Employers must have paid the full amount claimed for an employee’s wages to the employee before each claim is made.

How can employers get their money?

Employers must pay their employees wages in November and so on, and then they will be able to get the government funding for the paid salaries from December. They can claim the money back from 8 December.

Subsequent months will follow a similar pattern, with the final claims for April being made from early May. More detail about this process will be published in guidance by the end of October 2020.

How long will it be provided?

The new Job Support Scheme runs for six months from the start of November, to the end of April 2021, however, the government says it will review the end-date in January.