Over recent months during the outbreak of Covid-19, the nation has been informed with different news updates relating to the furlough and retention schemes. As the current Job Retention Scheme is coming to an end in late October, Rishi Sunak has faced pressures to protect jobs due to the resurgence of the Coronavirus.
On the 24th September, the Chancellor told MPs “The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery.”
The latest news from the Government states however, that from the 5th November 2020, the UK will be going into another nation-wide lockdown, in order to prevent the spread of the Coronavirus. As a result, meaning that all non-essential businesses will have to close.
How will the new extension work (from the 5th November)?
Due to the most recent update and announcements, there are different factors to consider.
Firstly, if you are an employer that has to close your business due to the latest lockdown measures, you can claim full furlough for your staff.
These furlough grants will cover 80% of your staff to pay to a full maximum of £2,500 per staff member, per month.
*Note: Employers will still need to pay for pension contributions as well as National Insurance.
Secondly, if you are a business that can stay open during Lockdown 2.0, you can still claim flexible furlough grants in order to help support loss of income due to reduced opening hours, as well as staff support.
What is the new scheme?
The new scheme that should have been commencing on the 1st November, has now been postponed. Because of this, the government are now extending the Job Retention Scheme until December, in order to support employers with their furlough for their staff members.
The process of the new scheme that has been postponed, involves companies continuing to pay their employees for the time they have worked. However, the cost of hours they do not work will be split between the employer, government and the employee. The government will be paid through wage support, and the employee will be paid through the wage reduction. In addition to this, the employee will remain at the company and keep their job.
Moreover, the Government will pay ⅓ of hours not worked up to a cap of £697.92 a month, in addition to the employer also contributing ⅓ . As a result of this, employees will be able to earn a minimum of 77% of their normal wage, where the contribution from the Government has not been capped.
Who is eligible?
In order to qualify for the new Job Support Scheme, employees must have already been on their employer’s PAYE payroll either on or before the 23rd of September. Moreover, for the first three months of this new scheme, employees must work a minimum of 33% of their normal hours. Further decisions to increase hours will be made after those three months by the government.
In addition to this, all employees who meet these eligibility criteria are open to the new scheme if they were not previously furloughed.
|Hours Employee Worked||33%||40%||50%||60%||70%|
|Hours Employee Not Working||67%||60%||50%||40%||30%|
|Employee Earnings (% of normal)||78%||80%||83%||87%||90%|
|Gov’t Grant (% of normal wages)||22%||20%||17%||13%||10%|
|Employer Cost (% of normal wages)||55%||60%||67%||73%||80%|
For more information and further details on the latest update, you can access the full Job Support Scheme published by GOV.UK. You can also contact us for payroll information or if you have any questions about the new Job Support Scheme.
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