Furlough Ends 31 October 2020, So What’s Next?

The Furlough lifeline is coming to an end and will be replaced by the “Job Support Scheme.”

Rishi Sunak has indicated that the aim of the new scheme will be to “support only viable jobs which provide genuine security” rather than keeping alive jobs only in existence because of the Furlough Scheme. The impact of this means that venues that are still closed will not get the benefit of the Scheme.

What does the Scheme mean?

• Only employees who work at least one third of their hours will be eligible whereas under the old Scheme employees were not required to work
• The Scheme will run for 6 months from 1 November 2020
• The employee must have been on the payroll since at least 23 September 2020
• Each working arrangement must cover at least 7 days
• The employee cannot be made redundant or put on notice whilst the Job Support Scheme is being claimed, the employees’ “normal” salary will have to be paid during this time

Under the new Scheme, if an employer can’t have the employee back full time the salary will be topped up for the unworked hours. Therefore, the employee works at least one third of their hours, the government will top up one third and the employer the other one third of the remaining wages. This means that the employee would get at least 77% of their pay.

The payment is be based on the employee’s normal salary and the government total contribution will be capped at £697.92 per month. Under the old Scheme the government paid 80% (capped at £2,500) of the employees’ monthly wages under the new Scheme they will be paying a maximum 22%.

All employers with a UK bank account and UK PAYE Schemes will be able to claim the grant and there is no prerequisite to have previously used the Furlough Scheme.

The Scheme is open to small and medium business. Large businesses will have to meet a financial assessment test and be able to show that their turnover is lower now than before the Coronavirus crisis.

Other help available to businesses to incentivise job retention is;

• £2,000 for each under 25 year old apprentice taken on until the end of January 2021 and £1,5000 for over 25’s
• £1,000 for every furloughed employee kept on until at least the end of January 2021
• £1,500 for every out of work 16-24 year old given a “high quality” work placement for 6 months

It has been estimated that the Furlough Scheme will cost the government £60bn in total.