With the furlough scheme officially ending in October, UK Chancellor Rishi Sunak has announced a new scheme to support workers and businesses impacted by Covid-19. The Job Support Scheme will begin in November – here’s what we know so far about how it will work and who it will affect.

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Why the Job Support Scheme is Needed

Rishi Sunak’s announcement follows many months of discussion and debate about what will happen to furloughed employees once the scheme ends in October. Many experts have expressed concern that many companies will not be in a position to take back furloughed employees and that this will lead to mass redundancies and significant, lasting damage to the economy. The government have been forced to take action to protect jobs.

What is furlough? Furlough was brought in by the government in April a couple of weeks after lockdown as a way to protect employees that were at risk of redundancy as a result of Covid-19. Employers were able to temporarily furlough (place on leave) employees with the government covering up to 80% of their wage. It’s estimated that three million people remain furloughed.

Youth unemployment in numbers: The pandemic has disproportionately impacted young candidates. One in three 18-24 year-olds has lost their job due to the pandemic and unemployment for this age group is up 76,000. The number of people claiming benefits rose by 120% from March to August.

How Does the Job Support Scheme Work?

The Job Support Scheme will provide financial support to furloughed employees, although not to the same level of the previous scheme. Here are the key details:

  • The scheme will run for six months from November 1
  • Workers must work at least a third of their hours to be eligible
  • Whereas furlough covered 80% of usual wages, this scheme will see the government pay workers 33% of wages for the hours they haven’t worked, with employers also having to cover 33%
  • In total, employees will receive 77% of their usual pay – capped at £697.92 each month
  • Self Employment grants will be extended on “similar terms”
  • For employers, Sunak announced that businesses that deferred their VAT until March 2021 will no longer have to pay a lump sum and instead can pay in instalments. The plan to subsidise jobs will be open to small and medium-sized businesses, with large businesses only able to qualify if their turnover has fallen by a third as a result of the pandemic.

This blog will be updated as new information is released.