An Overview of the ‘Job Support Scheme’ and ‘Local Furlough Scheme’
Background
Chancellor Rishi Sunak has announced a new Job Support Scheme which is intended to replace the current Coronavirus Job Retention Scheme when it ends on 31 October 2020. The Job Support Scheme aims to provide continued financial support and assistance to workers who cannot fully perform their job, with a view that it may help prevent mass redundancies throughout the UK.
As it stands under the Coronavirus Job Retention Scheme, the employer is responsible for paying up to 20% of the employee’s wages; with the remaining 60% of wages being paid for by the Government.
The Job Support Scheme will alter the percentage of employee’s wage support and contributions being received by the Government and their employee.
When will the Scheme be introduced?
The Job Support Scheme will begin on 1 November 2020. Rishi Sunak has announced that the introduction of the scheme is to protect viable jobs as part of his ‘Winter Economic Plan’, and will therefore continue until April 2021.
Key Features
The employee must be working at least 33% of their hours for the scheme to apply. The employer will be responsible for payment of the employee’s wage for the time worked. The Government will then contribute up to 22% of the employee’s wage for the time not worked. The employer will also pay up to an additional 22% of the employee’s wages for the time not worked. Up to 22% will go unpaid.
An employee should therefore expect to receive up to 77% of their ordinary wage, where there is no cap applied.
The Job Retention Bonus of £1,000 per furloughed employee still employed on 31 January 2021 is unaffected by the Job Support Scheme.
Local Furlough Scheme
Rishi Sunak has also announced the implementation of a new ‘Local Furlough Scheme’ or “Lockdown Furlough”, which is being used to expand the Job Support Scheme in order to protect jobs and support businesses required to temporarily close as a result of coronavirus measures and restrictions.
The Local Furlough Scheme will most likely apply to businesses located within tier 3 of the Government’s new three-tier system. The system was designed to allocate levels of risk to areas across England. Those areas which are located within tier 3 are “extremely high risk” and will have stricter measures put into place by the Government, which will likely include closures of businesses such as pubs, gyms and restaurants.
The Government has announced that if your business must close as a results of coronavirus measures then they will contribute 67% towards employees’ wages, up to a maximum of £2,100 per month. The employee must be working zero hours to be eligible.
Cash grants for businesses required to close in local lockdowns will also increase by up to £3,000 per month.
The below chart from the BBC shows the differences between the original Furlough Scheme, the Local Furlough Scheme and the Job Support Scheme.
Moving Forward
Coronavirus has no doubt caused both financial and emotional stress for employers and employees. Whilst the Government continue to provide support, the likelihood of job losses and permanent business closures is a gloomy reality for the UK.
If you are either an employer or employee and require advice on the above or the Job Support Scheme please contact Hatchers Solicitors’ Employment Law Team on 01743 248545 or mail@hatchers.co.uk.
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