The Chancellor, Rishi Sunak, has set out the government’s new job retention measures in a statement to the House of Commons.
The furlough scheme will come to an end, as planned, on 31 October 2020. The government says it cannot keep jobs open only inside the furlough scheme – it cannot save every job. Now support is needed to bring people back to work.
Employees will need to work a minimum of 33% of their usual hours. For every hour not worked the employer and the government will each pay one third of the employee’s usual pay, and the government contribution will be capped at £697.92 per month. Employees using the scheme will receive at least 77% of their pay, where the government contribution has not been capped. The employer will be reimbursed in arrears for the government contribution. The employee must not be on a redundancy notice. The scheme will run for six months from 1 November 2020 and is open to all employers with a UK bank account and a UK PAYE scheme. All Small and Medium-Sized Enterprises (SMEs) will be eligible; large businesses will be required to demonstrate that their business has been adversely affected by COVID-19, and the government expects that large employers will not be making capital distributions (such as dividends), while using the scheme.
Other key points to note:-
- to be eligible, employees must have been on the employer’s Real Time Information submission on or before 23 September 2020 (here we go again)
- the minimum 33% threshold hours for which an employee must work may be increased in months 4-6 of the scheme
- working patterns can vary, but each short-time working arrangement must cover a minimum period of seven days
- the government’s grant will not cover Class 1 employer NIC or pension contributions, although they remain payable by the employer
- ‘usual wages’ will follow a “similar” methodology to the CJRS
It is likely that further information and clarification will come out in the next few days and weeks.