The Job Retention Scheme draws to a close: what next?

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Date: 12 October 2020

Sjopping basket containing labels with the different job support schemes in place during COVID-19

The Job Retention Scheme, better known as the furlough scheme, is finally drawing to a close on 31 October. By then, the scheme will have been in place for eight months.

Initially the scheme was only intended to last three months, but such is the scale of the coronavirus crisis it was extended until 31 October.

At the height of the scheme, approximately 9.6 million employees from around 1.2 million employers had been furloughed under the scheme. Furloughed workers have received 80% of their normal salary, up to £2,500 a month, until the end of October.

Since August, businesses have been encouraged to bring furloughed staff back to work on a part-time basis, with employers being asked to pay a percentage towards the salaries of their furloughed staff. The employer payments gradually increased over the course of the scheme replacing the government contributions, ensuring staff continue to receive 80% of their salary.

The final deadline for claims falls on 30 November 2020. With so many employers and employees currently still be supported under the scheme, many have been asking what's next?

The Job Support Scheme opens

The Job Support Scheme replaces the furlough scheme. It will run from 1 November 2020 for six months and will be open to businesses across the UK even if they did not claim the Job Retention Scheme.  

The scheme is designed to support 'viable' jobs in businesses are experiencing lower demand of over the winter months due to coronavirus. The government will contribute towards the wages of employees who are working fewer hours than normal. Employers will pay the wages of staff for the hours they work - but for the hours not worked, the government and the employer will each pay one third of their equivalent salary.

The grant will be based on the employee's usual salary, capped at £697.92 per month. Employees must be working at least 33% of their usual hours.

In addition, the government has announced that it will pay grants to firms that have been forced to close as part of local or national restrictions to cover the wages of staff who cannot work. In these circumstances, the government will pay two-thirds (or 67%) of employees' salaries, up to a maximum of £2,100 a month. Employers will not be required to contribute towards employees wages but will be asked to cover NICs and pension contributions. Businesses can only claim for periods they are subject to restrictions and employees must be off work for a minimum of seven consecutive days.

Job Retention Bonus

The chancellor announced the Job Retention Bonus back in July. The one-off job retention bonus is worth £1,000 per employee that each employer continues to employ for three months after the furlough scheme ends.

Eligible employers will be able to claim the bonus between 15 February 2021 and 31 March. To be eligible, you must have made an eligible claim for furloughed employees through the Coronavirus Job Retention Scheme.

Employers will be able to claim the Job Retention Bonus in addition to the Job Support Scheme.

Ongoing support for the self-employed

To support the self-employed, the government is also extending the Self Employment Income Support Scheme Grant. Self-employed workers who are currently eligible for SEISS who are continuing to actively trade but with reduced demand will receive a taxable grant. The initial lump sum will cover three months' worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.

An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April.

Copyright 2020.

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