In a week of significant announcements from the House of Commons, today’s statement from the Chancellor was hotly anticipated by businesses across the UK. As previously expected, it provided final confirmation that the furlough scheme is to end on 31 October, with the Chancellor resolute in his assertion that it will not be extended, in any capacity, despite calls for him to do so.
Its replacement, the Job Support Scheme, would certainly appear to provide a lifeline for businesses who were concerned what the end of furlough would mean, however, this is a very different beast to the original Job Retention Scheme. The Chancellor was keen to note that the UK is not in the same position as it was in March, and economic aid from the government needed to reflect that.
This new scheme now requires employees to work a minimum one-third of their normal hours, which is a vast difference from the previous requirements of the furlough scheme that provided financial assistance when businesses could offer staff no hours. This time, the government’s contribution will be less and, unlike the furlough scheme, employees on the Job Support Scheme will not be able to be made redundant.
A key positive to take from this announcement is the eligibility for its use – it is open to all small and medium-sized businesses across the UK, regardless of whether they previously used the furlough scheme, although, further guidance on what an SME is for this scheme will presumably be provided later. While larger businesses are not automatically eligible, they will still be able to use it if they have suffered a drop in turnover. Businesses who use the scheme will also be able to claim for the Job Retention Bonus provided they are eligible for this bonus, meaning the use of the Job Support Scheme will not take away the promise of a company receiving £1,000 per previously furloughed employee that they keep on until 31 January 2021.
The scheme, which starts on 1 November and is expected to run for six months, might be just enough to help businesses to retain more employees as we face the prospect of a challenging winter. As it’s impossible to predict what position we will be in by May 2021, it remains to be seen what will happen when this scheme comes to an end.
Kate Palmer, Associate Director of HR Advisory at Peninsula