finance

New furlough scheme explained: How Job Support scheme extension will pay two thirds of wages if businesses have to close


WORKERS will get two thirds of their wages covered by the government if their place of work has to close down due to local coronavirus restrictions.

The Chancellor announced the boost to the Job Support Scheme as parts of England and Scotland prepare for tougher lockdown measures.

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The government will pay two thirds of wages if businesses have to close due to local lockdown measures

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The government will pay two thirds of wages if businesses have to close due to local lockdown measuresCredit: Refer to Source – Alamy

Parts of the hospitality industry, including cafes, pubs and restaurants, in high risk areas are expected to be temporarily shut down for the second time this year and it could be as soon as Monday.

Rishi Sunak also revealed businesses that are forced to close will be able to claim grants worth up to £3,000 a month from the government.

The payouts will open to places that haven’t yet been able to reopen since March, like nightclubs.

It comes as new data showed the economy grew by 2.1% in August but that the pace of recovery has slowed.

The Chancellor speaking on Sky News about the new support package

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The Chancellor speaking on Sky News about the new support packageCredit: Sky News

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Mr Sunak said: “Throughout the crisis the driving force of our economic policy has not changed.

“I have always said that we will do whatever is necessary to protect jobs and livelihoods as the situation evolves.

“The expansion of the Job Support Scheme will provide a safety net for businesses across the UK who are required to temporarily close their doors, giving them the right support at the right time.”

But Shadow Chancellor Annelise Dodds previously blasted Mr Sunak for waiting until “the last possible minute” to lay out more help.

Here’s everything you need to know about what help has been announced.

Will I get paid if my work has to close due to lockdown?

The latest announcement is an extension to the Job Support Scheme that will be available from November 1.

It has now been expanded to offer extra support for employees working for a business that has been ordered to close under local lockdown restrictions.

The government will pay two thirds – up to £2,100 a month – of staff wages if their work has been shut down.

Employers will only be required to pay workers’ National Insurance and pension contributions. They can choose to top up wages but they don’t have to.

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Mr Sunak said the scheme is “more generous” than the furlough scheme, which currently sees the state cover up to 60% of employees wages, capped at £1,875 a month.

Employers are expected to contribute 20% of furloughed staff salaries, as well as NI and pension contributions.

But the government won’t cover as much of employees wages as it did when the furlough scheme first launched, which was set at 80% up to £2,500 a month.

Restaurants and pubs that have been restricted to just offering takeaways will also be able to take advantage of the help.

Employees can’t work or volunteer for their employers while on the scheme but they can work or volunteer for another business of charity.

Once lockdown restrictions are lifted, workers can then be rolled onto the first part of the Job Support Scheme if employers can’t offer them their full contracted hours due to decreased demand throughout winter.

Workers will also need to have been on the RTI payroll on September 23 to qualify.

An RTI is sent from employers to HMRC, typically on payday.

Members of staff who’d started a new job before the deadline but were yet to receive their first pay cheque are excluded from the scheme.

The same loophole left thousands of “eligible” workers unable to be furloughed.

The scheme will run for six months and be reviewed after three.

How do I claim the new Job Support Scheme help?

Like furlough, employees will be rolled onto the scheme by their employer so you won’t be able to claim it yourself.

It will work in the same way too, with businesses covering the upfront costs and then claiming them back from the government through the Gov.uk portal.

Claims will open from December 2020 and will be paid monthly in arrears.

Employers can only take advantage of the grants while local lockdown restrictions are enforced and employees must be off work for a week before they’re eligible.

The help is available in England, Scotland, Wales and Northern Ireland.

Businesses can claim the help even if they didn’t use the Coronavirus Job Retention Scheme.

What is the Job Support Scheme?

The latest round of financial aid is part of the Job Support Scheme announced last month.

It’s open to employees who are working fewer than normal hours due to decreased demand and will see workers paid two thirds of their salary for the hours they can’t work.

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Employers will continue to pay staff for hours that they work – but for the hours they’ve not worked the government and employer will pay one third of their equivalent salary.

In total, someone on the scheme will receive 77% of their total pay, according to The Treasury.

The government’s chunk of the support will be capped at £697.92 per month.

To be eligible, employees must be working at least a third of their contracted hours.

Employees are allowed to work more than a third of their contracted hours and still be eligible for the scheme, but the amount the government will pay is reduced. 

For example, an employee working half of their normal hours will receive 83% of their total pay packet. 

The government will cover 17% of their normal wages, while the employer will pick up 67%. 

Anyone who is in employment as of September 23 can be put on the scheme – and it’s open to all small and medium-sized businesses who didn’t apply to furlough before.

What is Rishi Sunak’s Job Support Scheme, who is eligible and how do I apply?

  • To be eligible, employees must be working at least a third of their contracted hours and be paid for those hours in full by their employer.
  • For the two thirds of the other hours not worked, the Government will pay a third – so 22 per cent of their overall wages.
  • The employer will have to pay the other third of it. It means with the third they are already paying, they will have to fork out 55 per cent of the total wages.
  • The scheme will start on November 1 – the day after the other furlough scheme ends.
  • It’s open to all small and medium sized businesses, even if they didn’t use the furlough scheme beforehand.
  • The Job Support Scheme will only help those on the PAYE pay roll. Self-employed workers have been given more time to pay their tax bill and extra grant help.
  • It’s likely that employees won’t have to apply – and the employers will do the work for them.
  • Employers were previously able to claim back the wages from the HMRC portal.

When will furlough end?

The furlough scheme has been wound down since July and is due to end completely on October 31.

When it first launched back in March, the government covered up to 80% of staff salaries plus their national insurance and pension contributions.

It was then up to employers whether they topped up employees’ salaries to 100%.

From August, companies were asked to pick up the tab for the national insurance and pension contributions, while from September the government subsidy dropped to 70% of wages.

The amount covered by the state fell again from October 1 to 60% before the support is withdrawn completely at the end of the month.

The ending of the scheme is expected to spark mass redundancies as businesses look to shed overheads as they battle to survive.

Trade unions and organisations have been urging the government to rethink plans to end the scheme to avoid a second wave of job cuts.

More than 430,000 jobs have been lost as a result of the pandemic, mainly on the high street and travel industries.





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