New Jobs Support Scheme

The Chancellor, Rishi Sunak last week announced the new Jobs Support Scheme. The scheme will come into effect on 1 November, immediately after the existing furlough scheme comes to an end on 31 October and will run for 6 months to April 2021.

To be eligible, employees must work at least 33% of their normal working hours, where they will be paid as normal by the employer for those hours.  The government and the employer will then pay one third each of the hours not worked. The level of grant will be calculated based on the employee’s usual salary and, we understand, is capped at £697.92 per month.

Here is an illustrated example:

Let’s say an employee usually works 100 hours a month and is paid £10 per hour.  They could work 33 hours for which the employer pays them £330.  The employer and the government will then pay a further £220 each for the missing hours.  In total, the employee receives £770 of which £550 comes from the employer and £220 from the government.

It is worth noting that this means that an employer who is only able to offer 33% of hours will still need to pay over half of the normal wages for an employee. In our initial view, we are not sure how effective this will be to persuade employers to utilise this scheme rather than to make redundancies.

This scheme will be available to all SMEs but also larger businesses who can show their turnover has fallen.

As always, further detail will be needed to understand exactly how this will work in practice. We will let you know as and when such detail is released.

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