As we suspected, the Furlough scheme will not be extended and will be coming to an end on 31 October 2020. There is still enough uncertainty around which means that we do not have a clear idea of what the landscape will look like for companies and individuals.
Almost daily, we continue to see the devastating news that more and more companies are making redundancies and job cuts which leaves many unemployed. The figures continue to rise and it is estimated that we will see up to 2 million job losses by the end of the year!
So, what is this new scheme that Chancellor Rishi announced?
It took me a little while to wrap my head around it, it was not the most straightforward so I do not envy Rishi for having to propose it. The scheme will start from 1 November 2020 and will run for 6 months.
The short of it is that instead of keeping employees on furlough and claiming for their wages, companies will be able to have employees working on reduced hours and then their wages for the hours not worked will be equally split between the employer, the employee and the Government. This means that, up to a cap of £697.92, the Government will contribute up to a third of the wages for the hours not worked by the employee (but not Class 1 employers' National Insurance Contributions or pension contributions) and that way they ensure that employees receive at least 77% of their wages provided that they work at least a third of their contractual hours.
Interestingly, unlike with the furlough scheme, employers cannot give a notice of redundancy to employees whilst they are claiming within this new Job Support Scheme which goes hand in hand with the Government's foreword about this scheme that it is "… designed to protect viable jobs in businesses who are facing lower demand" as stated in the factsheet published by the Treasury.
There are a number of eligibility criteria which are largely self-explanatory. For employers, the businesses must have a UK bank account and have a UK PAYE system but they do not have to have previously claimed under the Coronavirus Job Retention Scheme (i.e. the furlough scheme). There will also be a means test of sorts for larger businesses as the scheme is aimed at those businesses with lower turnover but those will not be required for SMEs. For employees, the criteria includes being on the employer's payroll on or before 23 September 2020.
Similar to the furlough scheme, guidance will continue to come out in the coming days and we will be here to support our clients as more information come out. Our expert employment and commercial teams are available to offer guidance and advice to businesses that are considering their options of using this scheme, or potentially restructuring or even making redundancies. We understand that those decisions are not easy and, sometimes, outside advice can be helpful and invaluable.