The Chancellor has announced a new scheme that will operate as an expansion of the Job Support Scheme (JSS). This will partially fund the wages of staff that work at businesses which have been asked to close by the Government.
On Friday 9th October, Chancellor Rishi Sunak announced a plan that will see employees receive two-thirds of their wages paid by the Government during the time that they are unable to work. The employees eligible for this are those who work at businesses that the Government legally asks to close down due to COVID-19 restrictions.
Rishi Sunak expressed his hope that this would be a “reassurance and a safety net for people and businesses in advance of what may be a difficult winter”.
Mr. Sunak also expressed on Friday that the Government is also rolling out an increase in “the generosity and frequency” of grants for businesses, up to £3000 a month paid every fortnight.
This new plan comes amid speculation that the Health Secretary, Matt Hancock, is expected to implement local lockdowns in areas that have seen a rise in COVID-19 cases. This is expected to significantly impact businesses in the hospitality sector including pubs and restaurants.
This announcement from Mr. Sunak has swiftly followed the mayor of Greater Manchester, Andy Burnham’s threats, to legally challenge the Government if “proper compensation and a local furlough scheme for staff” were not introduced in areas where businesses were forced to close.
Sophie Wingfield, Director of Policy at the Recruitment and Employment Confederation (REC), said:
Businesses which find themselves under tougher COVID restrictions needed this support to help keep their staff in jobs. It’s the right call. But the Chancellor must be mindful that shutting of businesses in affected areas will have knock-on effects right down the supply chain.
This includes recruitment firms which have been working hard to supply staff to businesses in sectors like hospitality as they reopened. We need to make sure the right support reaches those businesses too. We must also ensure temporary workers, a huge source of strength for businesses right now, do not fall through the net and that the scheme works effectively for all forms of worker – which took too long to establish in the original furlough scheme.
Peter Meyler, Head of HR Analytics & Consulting at Barnett Waddingham, comments on why this measure might be too late for some struggling businesses, stating:
The Government’s more targeted approach to financial support was required for the initial lockdown, instead of the “one size fits all” approach that came out of the original Job Retention Scheme. It’s especially necessary given the evidence of some businesses using furloughing fraudulently, or when they didn’t need to, when others were in much greater need of support and protection over a longer period.
Good businesses plan for the long term and couldn’t wait for this change. They have already been preparing for the forthcoming end of the furlough scheme. They have put in place redundancy programmes to reduce their workforces, even after considering whether they could use the new Jobs Support Scheme. This makes it hard to turn back the clock. It’s important now that employers are communicating and engaging with their employees proactively, transparently and honestly. There’s no time or room for indecision when peoples’ livelihoods and mental health is at stake.