Job Support Scheme to replace furlough arrangements from 1st November

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The Chancellor, Rishi Sunak, has announced the introduction of the Job Support Scheme, a new initiative to help support businesses and protect jobs when the Coronavirus Job Retention Scheme ends on 31 October.

Under the Job Support Scheme, which is set to be made available from 1 November for a six-month period, the Government will pay a proportion of the wages of workers who have seen their hours reduced due to the COVID-19 pandemic but who continue to fulfil at least one-third of their normal hours.

Employers will continue to pay employees for the hours they work. The Government will pay one-third of normal hours not worked, up to a cap, with the employer also contributing one-third. As a result, employees will be guaranteed to earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.

Employers will not be permitted to give employees notice of redundancy during the period when they are claiming under the scheme, unlike under the current Job Retention Scheme.

The Job Support Scheme is the main component in a range of new employment support measures being introduced, including an extension of the VAT cut to 5% for the hospitality and tourism sector until 31 March 2021. The Chancellor also confirmed that any firms that have taken advantage of Government loans during the pandemic will be given an extended period to repay them.

HM Treasury has published a factsheet on the new Job Support Scheme which provides further details on the eligibility criteria for employers and employees, the wages covered, the claims procedure and how HMRC will conduct checks. More Government guidance on how eligible wages are calculated will follow in due course.

It is hoped that the introduction of this new scheme, which is similar to schemes in Germany and France, will reduce the number of redundancies that are expected as a result of the Job Retention Scheme ending at the end of this month.  Unfortunately, it is still likely that a large number of redundancies will be unavoidable over the next few weeks and months.