The current furlough scheme ends on 31 October and will be replaced by the new Job Support Scheme
In its place will be the Job Support Scheme, which will take effect from 1 November.
How does the Job Support Scheme work?
The scheme allows businesses to reduce their employees’ hours, without cutting their pay to the same level.
For a business to be eligible, its employees must work a minimum of 33 per cent of their contracted hours.
The Government will then pay a third of the remaining hours not worked, with the business paying another third.
This means that employees working 33 per cent of their hours will receive 77 per cent of their full pay – 55 per cent paid by the employer, and 22 by the Government.
The scheme will start on 1 November and run for six months, meaning it will finish at the end of April 2021.
Employers retaining furloughed staff on shorter hours can claim both the Job Support Scheme and the £1,000 Job Retention Bonus.
Who is eligible for the scheme?
The scheme will be open to small and medium-sized businesses across the UK, even if they have not previously applied for the furlough scheme.
It will also support larger businesses whose turnover has been negatively affected by the coronavirus pandemic.
Employees must be on an employer’s PAYE payroll on or before 23 September 2020 to be eligible for the scheme.
Mr Sunak said staff need to work at least 33 per cent of their hours to make sure the scheme is supporting “viable jobs”.
After three months, the Government will consider whether to increase the minimum hours threshold.
What does the grant cover?
Employers must report employee payments to HMRC in order to be reimbursed
For every hour not worked by an employee, both the Government and employer will each pay a third of the usual hourly wage for that employee.
Government contributions will be capped at £697.92 per month.
It will not cover Class 1 employer National Insurance contributions or pension contributions, although these contributions will remain payable by the employer.
Employees who have previously been furloughed will have their underlying or standard pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough.
How can I claim?
Similarly to the furlough scheme, the onus will be on employers to claim the financial support on behalf of employees, meaning staff shouldn’t have to do anything.
According to the Government guidance, the scheme will be open from 1 November 2020 to the end of April 2021, but employers will only be able to make a claim online through the Government portal from December. They will be paid on a monthly basis.
Grants will be payable in arrears meaning that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an Real Time Information (RTI) return.