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?
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.
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.
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.
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.
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.
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.