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Furlough scheme ending

It’s an anxious time for businesses and employees as we rapidly head towards the end of the furlough scheme.

The chancellor announced that a new job support scheme (JSS) would be introduced to support employees when the current scheme ends on 31 October.

Instead of giving employees 80% of their normal wage, the scheme will offer a top-up wage to employees who are working reduced hours due to the pandemic.

The new scheme will run from 1 November until the end of April 2021.

Changing the terms of the support available has presented many employers with a difficult decision – do they bring back employees or make them redundant?

With very little time until the new scheme takes over, it is essential that employers make sure they are familiar with the criteria for applying.

Who qualifies for the job support scheme?

All UK SME businesses (up to 250 employees and turnover less than £36m) are eligible. Larger businesses will be subject to a financial assessment.

Employees must be on a PAYE payroll on or before 23 September 2020 and must be working at least a third of their normal hours.

Employees must be paid their normal rate of pay for the hours they do work, not the reduced furlough rate of 80%.

The employer and the government then equally share the cost of the remaining two thirds salary.

The government contribution will be capped at £697.92 a month and will not cover employer NI or pension contributions, these will remain the responsibility of the employer.

Employers planning to take part in the scheme will need to act swiftly as any amendments to employment contracts in terms of short-time working will have to be agreed with staff, in writing. HMRC may request a copy of the agreement.

The aim of  the scheme is to help support viable jobs. Employees cannot be made redundant or put on notice of redundancy while they are on the scheme.

Scheme payments (grants) will be paid monthly in arrears. This means employees will already have been paid when the grant is claimed. Checks will be carried out by HMRC before payments are issued.

Sarah Naylor, partner and employment law specialist, commented: “The JSS scheme is not as generous as the furlough scheme and the terms are far more complex. This will leave many employers with the difficult decision of retaining staff on the scheme or making redundancies.”

Employers who do opt to take advantage of the scheme must make sure that they submit the correct information to HMRC. Employees on the scheme will be contacted by HMRC and will be made aware of the claims being made on their behalf.

Making redundancies?

Employers need to bear in mind that redundancy pay must be calculated on the full pay rate, not the 80% furlough rate that staff may have been on.

Sarah warns: “There has been a sharp increase in the number of cases going before the employment tribunal, generally due to some fairly basic errors in the redundancy procedure.  Employees have strict employment rights, regardless of the situation businesses find themselves in.”

Any employer considering a redundancy programme should take professional advice first. A small amount of legal advice at the outset could save more than just money.

Firms required to close due to Covid restrictions

If your business is required to close as part of new lockdown measures read the governments latest advice here – new support package announced. 

If you would like a no obligation chat about your options, call our team today on 01302 320621.

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