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The economic impact of the Coronavirus pandemic has hit businesses across the UK. As we enter the winter period, a fresh 6 months of restrictions coincide with the end of the Coronavirus Job Retention Scheme (the government’s furlough Scheme). This scheme is supporting almost 9.6 million jobs across the country.
These new restrictions pose a huge challenge for businesses in the travel, tourism and hospitality sectors, who will need further support to survive economic hardship. The furlough Scheme will officially end in October 2020, and the Chancellor has announced its replacement, the Job Support Scheme. This blog will take you through what the new Scheme means for employers and employees.
Am I eligible for the new Scheme?
The new job support Scheme will begin at the start of November 2020 and run for 6 months until the end of April 2021.
The Scheme provides more targeted support. It’s intended to help top up the salaries of employees who can still work. This differs from the previous furlough Scheme which provided blanket support for all affected employees.
The criteria to qualify for support under the new Scheme are:
- Employees must be working at least one-third of their contracted hours
- The company must either be a small or medium-sized business (which qualify automatically), or a large business whose turnover has fallen during the crisis
The Scheme is available to all employees who satisfy these requirements, whether they were previously on furlough or not.
How does the new Scheme work?
The hours that the employee actually works will be paid by the employer. This must be at least one third (33%) of their contracted hours for them to qualify under the Scheme.
On top of this, two-thirds of the remaining unworked hours (44%) will be paid by the government and the employer, contributing one third each (22%). This brings the total earnings of the employee to 77% of their full salary.
Although this is similar to the previous furlough Scheme, the new Scheme shifts more of the burden from the government to the employer. The government contribution of 22% is capped at £697.92 per month, which is noticeably lower than the 80% government contribution capped at £2,500 that the furlough Scheme had provided. Meanwhile, the minimum amount that employers must pay to benefit from the Scheme has risen to 55%. This is much higher than their contributions have been under the previous furlough Scheme.
It appears that the Government has changed its strategy to saving “viable jobs”. Therefore the focus of this new Scheme is to support jobs that can still be carried out rather than provide blanket support for jobs that cannot.
What about self-employed support?
As part of the wider Winter Economy Plan, the Chancellor is also offering further support to self-employed individuals. This support is an extension of the existing Self Employment Income Support Scheme Grant, so anyone eligible for the original Scheme will be eligible for the extended one. This covers self-employed individuals who are actively trading but have seen a reduced demand due to COVID-19.
The grant offers 20% of average monthly trading profits across a maximum three month period, starting on 1 November 2020 to the end of January 2021. Support will be capped at £1,875 per month. The government has also announced that further grants may be offered from February 2021 onwards, depending on the circumstances in the new year.
For more information, read our legal guide on help for your business during coronavirus.