Government unveils Job Support Scheme in an attempt to prevent mass redundancies

by Yusuf Odabashy

The Job Support Scheme has recently been unveiled as the successor to the Job Retention Scheme, also known as the ‘Furlough’ scheme. It is expected to lessen the effects of the pandemic on the economy, and fundamentally prevent mass redundancies, as the government brings in new restrictions to tackle the increase in Covid-19 cases.

Presently, around 12% of the UK’s workforce are receiving their salaries through furlough, and this will end on 31st October. Under the new plan, which will begin on 1st November, businesses facing lower demands due to Covid-19 restrictions will be able to protect ‘Viable Jobs’ and avoid job cuts. However, when unveiling the new measure, the Chancellor declined to provide a definition of ‘viable jobs’, instead acknowledging that it would be impossible to sustain or save every job.

One of the main ways that the Job Support Scheme differs from the Retention Scheme is down to the amount of help employers will receive from the government. Under furlough leave, employees initially received 80% of their wages, which was then reduced to 70% on 1st September. Furthermore, small and medium sized businesses will automatically be eligible for the Job Support Scheme. Larger businesses will need to meet a financial assessment test, essentially meaning that they have to prove that their turnover is impacted due to the pandemic.

The Job Support Scheme will see the support for employees reduced. Employers will continue to pay their employees for the hours worked in a week.  However, if there is a lower demand and an employee cannot work their usual hours in the week, then the pay for the unworked time will be split between the government and the employer, each covering a third of the respective pay. It is important to note that the employee must work at least 33% of their usual hours to be eligible for the scheme. The government contribution is capped at £697.92 a month, which means this is the maximum that they will pay towards an employee on the scheme, per month.

There is no set definition as to what a ‘viable job’ is, however, employees must have been on their employers PAYE payroll on or before 23rd September 2020 in order to qualify.  As for employers, as long as they have a UK bank account and UK PAYE scheme, they are eligible to access the Job Support Scheme.

The subsidy scheme is a substitution of the furlough scheme, albeit a less generous one. Employers will have to contribute more, potentially adding to the strain that they are facing, but at the same time, it could prevent mass job cuts and unemployment reaching into millions. The Job Support Scheme will eventually run into the billions, costing the Government an estimated £300 million a month.

For more information about the Job Support Scheme, and to access some calculations by the government on how much they will contribute, please click here:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/921389/Job_Support_Scheme_Factsheet.pdf

This article is intended for guidance only and must not be relied upon for specific advice.

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