With the current furlough scheme coming to an end on 31st October 2020 the Chancellor Rishi Sunak delivered on 24 September 2020 a statement setting out new plans to help workers and businesses currently suffering as a result of the pandemic.
The intention is to support UK employers who face lower demand and to keep their employees attached to the workforce. It is however unlikely many will label the new job support scheme as ‘furlough mark 2’.
The key parts of the scheme are:
- For employees to be eligible they need to work a minimum of 33% of their hours.
- For remaining hours not worked, the government and the employer will each pay 1/3 of the wages.
- Employees working for example 33% of their hours will receive 77% of their pay, with 55% of their pay being paid by the employer and 22% by the Government.
- Employees working for example 70% of their hours will receive 90% of their pay, with 80% of their pay being paid by the employer and 10% by the Government.
- The Government contribution will be capped at £697.92 per month.
- The employee must not be on redundancy notice.
- The employer will be reimbursed in arrears for the government contribution.
- The scheme will run for 6 months from 1 November 2020 and is open to all employers with a UK Bank account and a UK PAYE scheme.
- All Small and Medium-Sized Enterprises will be eligible whilst large businesses will be required to demonstrate that their business has been adversely affected by COVID-19.
- The current minimum 33% threshold hours for which an employee must work may be increased in months 4 to 6 of the scheme.
- Working patterns can vary, but each short-time working arrangement must cover a minimum period of seven days.
Further details will be provided once guidance notes are published and of course it remains to be seen how attractive the scheme is especially for employers. In reality it will be much cheaper for firms to employ one person full time rather than 2 people part time which on the face of it appears to be a fundamental flaw. The job retention bonus, whereby the Government will make a £1,000 payment to a employer for each employee who was furloughed and remains continuously employed until 31st January 2021, may only just delay the inevitable.