Chancellor of the Exchequer replaces furlough with new Job Support Scheme

Rishi Sunak, Chancellor of the Exchequer, has unveiled plans for the Job Support Scheme which will replace the Coronavirus Job Retention Scheme on Sunday, November 1.

Running for six months, the scheme will top up salaries in firms which can’t take employees back full-time.

To be eligible, employees must work for at least one-third of their normal hours. For the hours not worked, the government and employer will each pay one-third of the remaining wages. This means the employee would receive at least 77% of their pay.

The payment will be based on an employee’s normal salary, with the government contribution capped at £697.92 per month.

So, for example, if someone earning £2,000 a month was working half their hours, they’d get £1,000 normal pay. They would then get £333 extra from their employer and £333 from the government.

This is almost the same as the 80% offered under furlough scheme – but employees have to work at least a third of their hours, instead of none. After three months, the government may increase the minimum number of hours worked.

See below table for how the scheme will work:

Hours Employee Worked 33% 40% 50% 60% 70%
Hours Employee Not Working 67% 60% 50% 40% 30%
Employee Earnings (% of normal wages) 77% 80% 83% 87% 90%
Government Grant (% of normal wages) 22% 20% 17% 13% 10%
Employer Cost (% of normal wages) 55% 60% 67% 73% 80%

Mr Sunak said: “We can’t continue to provide the same degree of support as we did at the beginning of this crisis and sustain it at that level.

“It’s not affordable and not sustainable for a prolonged period of time.”

The scheme is open to small and medium-sized businesses. Large firms are also eligible if they can prove their revenue has fallen because of coronavirus.

It is estimated the scheme will cost the Treasury an estimated £300 million a month for every million workers who take up the scheme.

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