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Rishi Sunak unveils the Jobs Support Scheme5th October 2020 Employment
Following the end of the furlough scheme on 31st October 2020, Rishi Sunak has today announced his new plan to protect jobs in the coming months amid the new restrictions which have been brought in this week.
The furlough scheme has been in place since March of this year and is estimated to have cost the government £39.3 billion to date. The scheme paid 80% of workers’ wages up to a maximum of £2,500 a month. Since July, workers have been able to return to work part time, on full pay, whilst still receiving furlough pay of 80% from the government for the days which they are not working. The new scheme reduces the amount of financial support that the government will provide to businesses, whilst still aiming to keep as many people employed as possible from November onwards.
The new Job Support Scheme will start in November and run for 6 months and it was confirmed that it can also run alongside the job retention bonus.
The scheme will provide a wage subsidiary for viable businesses and it will have three key features:
- Employees will have to work at least a third of their normal hours and be paid as normal for these hours.
- The government and employers will then each pay one-third of wages for hours not worked.
- The scheme will be open to all, including those who did not take advantage of the furlough scheme.
The scheme will only be open in the form set out above to small and medium businesses, larger businesses will have to show that their turnover has also decreased in order to qualify.
How does this compare to the schemes in other Countries?
Germany’s short term work scheme ‘Kurzarbeit’ has been in place since prior to the COVID – 19 pandemic and was utilised during the global financial crisis of the 2000’s. The idea is that the employee receives 100% of their wages for any hours which they do work for their employer and receive 60% of their wages for the periods in which they are not working their contractual hours, due to having been placed on reduced hours.
The scheme has been adjusted in response to the COVID – 19 pandemic, so that for the first three months the government will pay 60% of an employee’s wages when they are not working. In respect of the following three months, the government pays 70% of the employees wage during periods in which they do not work and between the 7th and 21st months (the maximum period the scheme can be utilised for) the employee will receive 80% of their wages from the government for the period in which they are not working. A minimum of 10% of the work force must have their hours reduced for an employer to qualify for the scheme.
So far, the German system is anticipated to cost the German government £31 billion by the end of 2021.
Unlike the UK, France has “one of the most generous furlough schemes in Europe”. Chômage partiel provides for organisations to ask employees to work reduced hours, with the government picking up the shortfall. The scheme does as it states: It allows employees to be ‘partially unemployed’.
France’s furloughing scheme pre-dates the COVID-19 pandemic. Organisations are allowed to cut employees' hours by up to 40% for up to three years. At present, the state will contribute 70% of the net salary for salaries up to €6,927 gross per month. At the height of the pandemic in April, more than 8.7 million employees in France were registered on the scheme.
The scheme is subject to lots of red tape, requiring organisations to come to an agreement with unions and offer formal guarantees of job security,however, the principle is the same as in Germany.
Last month, it was estimated that the scheme is expected to end up costing the state a little over €30 billion euros in total.
Is the UK scheme a move in the right direction?
It will remain to be seen how the scheme will be implemented in practice and we anticipate further detail from the government over the coming weeks, however, this is a positive move in the government’s strategy to support the UK through the next period of the COVID-19 pandemic, as we adapt to the ‘new normal’.
If you need advice or have any queries about dealing with any workplace issues arising from the COVID-19 outbreak, please contact Paul Chamberlain or another member of the employment team at JMW Solicitors LLP on 0345 646 0342.
This note is for general guidance only and should not be used for any other purpose. It does not constitute, and should not be relied upon as legal advice.
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