New Job Support scheme will replace furlough leave

Updated on 09 September 2020

The Coronavirus Job Retention Scheme (CJRS or ‘furlough leave’) was due to end on 31 October 2020, and be replaced with the Job Support Scheme outlined in this article. However, the government have since confirmed that the furlough leave scheme will be extended until 31 March 2021. Read our latest article on the extended furlough scheme.

Chancellor Rishi Sunak has today (24 September 2020) announced that the existing furlough leave scheme will be replaced on 01 November by a new Job Support scheme to aid businesses during another six months of tighter coronavirus restrictions. The scheme will last for six months until 30th April 2021. Employees must work at least 33% of their usual hours to be eligible for the scheme, with the cost of those working hours being met in full by the employer. The employee would then be paid two-thirds of any hours when they are laid off, with the cost of the non-working hours being met in equal shares between the employer and HMRC.

So, for example, if an employee works 33% of their usual hours in November, they will be paid 77% of their normal wage, with the employer paying the first 55% and the government making up the remaining 22%.

The new Job Support scheme aims to avoid a tsunami wave of redundancies, expected to occur when the existing coronavirus job retention scheme (furlough leave) ends on 31 October 2020. An estimated three million people remain on the furlough scheme and, in the absence of additional financial support, at least a million redundancies were expected at that point.

Sadly, the scheme’s requirement that the employee must work at least 33% of their usual hours, means it is unlikely to save jobs in the worst affected industries, which currently have little opportunity to generate income.

Employers wishing to take advantage of the scheme will, in most circumstances, need to seek agreement of the employees to make temporary changes to the employment contract.

Amended on 28 September 2020 to add:

More details are starting to emerge about the job support scheme. In particular, a Treasury factsheet has been published which confirms:

• The employer does not need to have claimed under the coronavirus job retention scheme (CJRS) to claim under the job support scheme
• The employee must work at least 33% of their usual hours (but this may increase from 1 February 2021)
• The job support scheme contribution will be capped at £697.92 a month
• The Treasury’s expectation is that employers will not be permitted to top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense
• Large businesses (probably those with 250+ employees) will have to demonstrate that their turnover is lower now than before the pandemic (meet a financial assessment test) and the Treasury’s expectation is that they will not be making capital distributions whilst accessing the grant