Chancellor announces Job Support Scheme as furlough system winds down

Rishi Sunak, Chancellor of the Exchequer has announced the Job Support Scheme, as part of his winter economy plan which means as long as an employee works a third of their usual hours, the Government and their employer will cover the cost of the hours not worked.

This six-month scheme will start on the 1st of November, immediately following the end of the Coronavirus Job Retention Scheme (CJRS). The Job Support Scheme means the Government will pay a third of the hours you have not worked with your employer topping up another third.

The scheme is eligible if the employee works at least 33 per cent of their usual hours, but will receive 77 per cent of their normal pay, with 55 per cent of the unworked hours being paid by the employer and 22 per cent by the Government. The amount of money a worker will receive will be based on their usual salary and capped at £697.92 per month.

The worker on the Job Support Scheme cannot be made redundant. The scheme will be open to all small and medium-sized enterprises (SMEs) and some larger firms who can prove that their business has been badly damaged by COVID-19 and are in need of it. It is open to all firms, not just ones who used the furlough system and claims can be made for both the Job Support Scheme and Job Retention Bonus.

The self-employed scheme will also be extended.

Mr Sunak said:

The Government will directly support the wages of people in work, giving businesses who face depressed demand the option of keeping employees in a job on shorter hours, rather than making them redundant.

The primary goal of our economic policy remains unchanged – to support people’s jobs – but the way we achieve that must evolve.

The Job Support Scheme is similar to Germanys short-time wage subsidy system ‘Kurzarbeit’.

The Chancellor has resisted calls to extend the furlough system.

Mr Sunak said:

It is fundamental not to protect jobs that only exist in furlough.

The Chancellor went on to explain how this scheme keeps employees in work but on shorter hours.

Lee Biggins, founder and CEO of CV-Library, said:

It would have been all too easy for the Government to extend the furlough scheme; but we welcome Sunak’s decision to adapt it as we head into the autumn and winter months. The new Job Support Scheme will help to slowly bring professionals back to work; some of whom may have been away from the workplace for as long as six months. It will also provide some respite for workers who may be feeling nervous about their career prospects; while alleviating pressures on employers to make difficult decisions about their workforce.

Unfortunately, the second wave is well on its way and it’s going to be a difficult period for the UK job market. Already, we’re seeing that people who work in industries that have been hard hit are starting to look for opportunities in different sectors; and application rates have soared massively. While more job opportunities are popping up every day, competition is rife, especially as people have been panicking about job security. The new measures may well be delaying the inevitable of mass unemployment, but they will certainly be welcomed by workers and employers alike.

Jonathan Richards, CEO and founder of Breathe, an HR software provider said:

It’s likely that small businesses across the UK are breathing a sigh of relief following the Chancellor’s latest announcement. For hospitality venues who face reduced opening hours over the next few months, supporting staff wages and being able to take advantage of the extended VAT reduction is welcome support.

However, as the government’s support only covers ‘viable jobs’, thousands still face redundancy. Supporting these people and businesses through the winter and beyond is critical as the coronavirus situation changes.

The VAT cuts for the hospitality sector has also been extended to March 2021.