Thursday 24 September 2020 4:01 pm

Rishi Sunak’s new job support plan: What do the changes mean for workers?

Chancellor Rishi Sunak has confirmed the £40bn furlough scheme will end on 31 October, to be replaced by a programme that will subsidise employees for part-time work.

So what do the new measures mean for employees and employers?

Read more: Government to subsidise wages of part-time workers in new scheme

What will replace the furlough scheme?

Sunak gave in to pressure to keep subsiding wages, creating a new “job support scheme”. 

It will start on 1 November and run for six months.

Under the job support scheme, companies will pay the wages of staff for the hours they work. 

During the time the employee is not working, the government will pay them a third of their equivalent wages. And the employer will chip in the other third.

It means the worker will lose a third of their equivalent wages for the time spent off work.

Read more: Coronavirus: Boris Johnson imposes stringent new restrictions for up to six months

How does the job support scheme compare to furlough?

Furlough paid 80 per cent of the wages of workers who may otherwise have been laid off, up to £2,500 a month.

The government said the new job support scheme will see employees earn at least 77 per cent of their normal wages. Most workers, then, will earn over 80 per cent of their net pay.

It will be cheaper for the government, however. It will contribute a maximum of 22 per cent of a worker’s wages, capped at £697.92 per month.

Read more: Bank and government support to UK firms tops £100bn

Which employees will qualify for the new scheme?

Sunak said the new scheme is aimed at “viable” jobs. Therefore, to receive the support employees must work at least 33 per cent of their usual hours.

Economists said this unfortunately makes it likely that lots of people who are currently furloughed will lose their jobs.

Employees must have been on an employer’s PAYE payroll in or before 23 September to qualify.

Read more: UK economy’s rebound cools amid coronavirus worries

What will Rishi Sunak's new job support scheme mean for workers?
The UK high street has been hit hard by coronavirus, with many businesses worried about new restrictions (Getty Images)

Which companies are eligible?

Large businesses will have to prove that their turnover has been reduced by the coronavirus pandemic to qualify.

All small and medium sized businesses are eligible, however. Sunak said the scheme is aimed at those who “need it most”. 

The scheme is open to businesses that haven’t previously used the furlough scheme.

And businesses can benefit from both the new scheme and the job retention bonus, under which the government pays £1,000 for each worker brought back from furlough.

Read more: Around 5m workers were furloughed in July amid uneven recovery

Can working patterns vary?

Yes. The government said employees will be able to cycle on and off the scheme, and do not have to have the same working pattern each month.

However, each short-time working arrangement must go on for at least seven days.

What about the self-employed?

Sunak extended the self employment income support scheme (Seiss). The extension will provide two grants and last for six months, from November 2020 to April 2021.

The first taxable grant will cover until the end of January, and will cover 20 per cent of average monthly trading profits.

It will cover three months’ worth of profits and be capped at £1,875 in total. The Treasury said it will set the level of the second grant in due course.

Read more: Boris Johnson: We must work ‘together’ to avoid second full lockdown

Which self-employed people will qualify?

To qualify, self-employed people must currently be eligible for Seiss. They do not have to have claimed the previous grants, however.

They have to be currently actively trading and continue to trade. And they have to declare that their usual work has been hit by Covid-19 between 1 November and the date of the claim.

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