Wages of workers who have not been able to return to the workplace full-time will continue to be supplemented in a scheme involving the Government and employers.
The Jobs Support Scheme will replace the furlough scheme when it ends, according to Chancellor Rishi Sunak, who announced that this will see staff get up to 77 per cent of their normal salaries for six months.
It aims to stop mass job cuts after the Government introduced new measures to tackle coronavirus. The current Job Retention Scheme is due to end on October 31.
Nearly three million are currently on partial or full furlough leave, according to official figures. The chancellor said that employees will have to be working for at least a third of their normal hours to qualify for the new scheme, which begins on November 1.
The government and the employer will then jointly cover part of their salary for the remaining hours not worked. The government will cover a third of this sum, capped at £697.92 per month, while firms cover a further third.
Mr Sunak said a similar scheme for the self-employed would be available.
But while this announcement provides immediate relief to small businesses, the Chancellor must also deliver long-term plans
Chirag Shah, CEO, Nucleus Commercial Finance, said: “As fears of a second wave become reality, businesses across the country are fighting for survival.
“As such, today’s announcement of an extension to both the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme is welcome news for business owners throughout the country, who are looking for access to fast and flexible finance now, more than ever before.
“SMEs are the backbone of our economy, and we hope these measures will provide British businesses with the support they need at this challenging time.
“But while this announcement provides immediate relief to small businesses, the Chancellor must also deliver long-term plans to ensure they can not only survive the Coronavirus crisis, but thrive for years to come: this is where the alternative finance industry has a vital role to play.”
Kingsley Napley employment partner Nikola Southern said: “The business community will welcome further support as the original furlough scheme comes to an end on 31 October.
Employers need to approach all workforce changes very carefully, whether deciding who to enroll under the new scheme or where axes should fall
Administrating the scheme will, of course, be challenging but it is better that businesses have the option of keeping employees in their jobs on shorter hours, rather than making them redundant due to the on-going effects of the Covid pandemic.
“Employers are being encouraged to try their utmost to preserve jobs wherever possible. However some job losses will, sadly, be inevitable.
“Employers need to approach all workforce changes very carefully, whether deciding who to enroll under the new scheme or where axes should fall. All decisions need to have a clear business rationale and be free from discrimination if employers are to protect themselves from claims down the line.”
But Seb Maley, CEO of Qdos was more sceptical. He said: “It looks like freelancers and contractors have once again been cast aside when it comes to receiving meaningful support from the Government. They have been left stranded and ignored when it matters most.
“Millions of people working for themselves via their own limited company have had very little to no support for six months now. Yet it will be these independent workers who will prove crucial to the UK’s economic recovery – they will provide businesses with flexibility and skills at a time when they need them more than ever.
as we move through the pandemic and beyond, employees will remember how their well their employer responded when they too needed a helping hand
“Most of the measures announced by the Chancellor today offer support to businesses with employees. And while the extension to the self-employment grant and business loans could help some independent workers, the government needs to look at this specific sector and offer more tailored support if it wants the economy to bounce back quickly.”
Robert Marshall, managing director of WorkLife commented: “While any measure to keep people in work is a good thing, we cannot forget about those workers who – having already taken a financial hit – might now face a partial loss in pay.
“The Chancellor’s new job support scheme will no doubt be met with a sigh of relief by struggling small businesses but, as we move through the pandemic and beyond, employees will remember how their well their employer responded when they too needed a helping hand.
“Firms having to employ these measures should now be looking at ways to support employees, especially their financial and mental wellbeing.”
Jamie Mackenzie, Director of Sodexo Engage, said: “Not only is this news a relief for businesses, especially SMEs, who have been strongly impacted by the pandemic and subsequent downturn in demand, but it also gives employees hope that they won’t be let go by their employer during this time of crisis.
“Although businesses will still have to share some of the costs for this, the benefits for staff are clear. Covid-19 has left many employees feeling vulnerable and anxious, so it’s vital that employers are aware of these feelings and can act on them. Now more than ever, businesses need to provide their workers with reassurance, clarity and whatever support is available to help them through this difficult time.”
Lawyer Stephen Ravenscroft, Head of Employment at Memery Crystal added: “The main difference from the CJRS is that the JSS will only be applicable for employees who work (and are paid) for at least 33% of their normal working hours. There is therefore a recognition that the jobs of those employees who remain on full furlough leave at the end of the CJRS cannot be saved.
“The JSS is similar in concept to short-time working schemes in France and Germany. For the remaining hours not worked by an employee, according to a tweet from HMRC (which is not altogether compatible with the Chancellor’s statement), the Government and the employer shall each pay a third of the employee’s remaining wages (and the employee forgoes the final third). We assume that this top-up shall be subject to a cap on pay similar to the CJRS.
“The JSS is not specific to particular sectors and is open to all SMEs, but larger businesses will only be eligible if their turnover has fallen through the COVID crisis.”