Following the Governments’ tightening of restrictions following an increase in the number of COVID-19 infections, the Chancellor, Rishi Sunak has unveiled new measures which will replace the furlough scheme when it comes to an end on 31 October 2020.The furlough scheme was rolled out prevent a major rise in unemployment when the UK went into lockdown in March. The scheme paid 80% of the wages of furloughed workers up to a maximum of £2,500 a month. In July, around five million workers were still receiving some or all of their income through the scheme, many in the hospitality sectors.
What are the new measures?
The Government will top up wages of workers covering up to two-thirds of their hours for six months from 1 November 2020.
The new Jobs Support Scheme involves the government supporting the wages of people in work, giving employers the option to keep people in work on shorter hours, rather than make them redundant. It will be open to all employees, not just those that have ben furloughed.
To be eligible employees will need to work a minimum of 33% of their hours. For the remaining hours not worked, the Government and the employer pay 1/3rd of the wages each. So, employees working 33% of their hours will receive at least 77% of their pay and keep their job.
For example, an employee earning £2,000 a month working half their hours, would receive £1,000 normal pay plus £333 extra from their employer and £333 from the government.
It has also been confirmed that the employer can also claim the job retention bonus if they qualify for the same.
All SMEs are eligible. Larger businesses will be eligible if, but only if, their turnover has fallen through the COVID crisis.
Employers and employees should note that an employer will not be able to issue redundancy notices to employees on the Job Support Scheme.
The Chancellor has also confirmed that he is extending the scheme for self-employment on “similar terms” to the existing job support scheme.
It is hoped that this will safeguard thousands of jobs which may have otherwise been lost. The
Jobs Support Scheme is however less generous then the furlough scheme. Those workers who are not working at all are still likely to lose their jobs when the furlough scheme end.
COVID-19 has already had a significant impact of unemployment. The unemployment rate between May and July was 4.1%. Young people have been disproportionally affected, with the number of 16 to 24 year olds unemployed up 76,000 for compared to last year.
In other news, a joint statement has been issued by Susan Clews (Chief Executive, Acas), Dame Carolyn Fairbairn (Director-General, CBI) and Frances O’Grady (General-Secretary, TUC), to help businesses and workers deal with the impact of possible redundancies.
The joint statement calls on employers considering redundancies to work with their trade unions and employees and get the process right by following these five principles:
If you have concerns or require advice regarding an employment matter please contact our Employe Team who are available to help. Email us at firstname.lastname@example.org or contact us on 01708 229444 (Upminster Office), 01277 211755 (Brentwood Office) or 01708 511000 (Hornchurch Office).
This article was written by Alex Pearce, Senior Associate in the Employment Team at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of September 2020.