The end of the Furlough Scheme – so what happens next? A blog by Business Butler.

It’s the end of the Furlough Scheme – so what happens next?

It is that time of year when the clocks have just turned back, the nights are drawing in and children across the country start to feel a little bit frightened as Halloween fast approaches.

However, this year millions of adults are also filled with fear and it’s not down to the ghosts and ghouls of Halloween. No, this is fear of the unknown because the end of October marks the end of furlough support, or the Job Retention Scheme to give its proper name, and employers and workers are worried about what happens next.

The fear and uncertainty are understandable because for the past seven months the Job Retention Scheme has ensured that furloughed workers across the UK were paid 80% of their salary, up to a maximum of £2,500. Thankfully, it’s not all doom and gloom because the scheme is being replaced by the Job Support Scheme which comes into effect on 01 November 2020.

The Job Support Scheme (JSS)

This scheme is divided into two categories – JSS Open for businesses that have to remain open during the ongoing pandemic and JSS Closed for those legally required to close their business.

The JSS Open

Although employers in this category can operate safely and their businesses remain open, demand will be significantly lower than usual. Therefore, this scheme provides employers with the option of retaining staff on shorter hours as opposed to making them redundant. Following the initial announcement of this scheme the scale of support has increased to protect more jobs and businesses.

Under the JSS Open an employee has to work a minimum of 20% of their usual hours and their employee will pay them for this. Additionally, the employee will receive two thirds of their normal pay for the hours they don’t work. This amount is made up of a 5% contribution from the employer – up to a maximum of £125 per month – and the remaining 61.67% will be paid by the government with a limit of £1,541.75 each month.

The JSS Closed

This version of the JSS is aimed at helping businesses by supporting the wages of their workers during the period where they have been legally required to close due to the coronavirus restrictions. Here, employees will be entitled to two thirds of their normal pay, up to a maximum of £2,083.33 per month and will be fully funded by the government. As well as protecting incomes for employees and limiting unemployment, the support will also ensure that when these businesses are allowed to open they will be able to do so quickly and won’t have to recruit and train new staff. A point to note here is that employees may still be entitled to Universal Credit.

What about the self-employed?

The Self-Employed Income Support Scheme (SEISS) grant is being extended. This extension is divided into two grants for the six month period from November 2020. The first grant is from the start of November until the end of January and covers 40% of average monthly trading profits. This will be paid out in a single lump sum, capped at £3,750 and covering three months of profits. The second grant is for the period from the start of February up to and including the end of April. HMRC is yet to announce the level of this grant but both are subject to Income Tax and NI contributions.

The Job Support Scheme is set to run for six months from 01 November and will be reviewed in January. Whether this is an adequate replacement for its predecessor and how well it’s received remains to be seen, but something tells me there may be fireworks on the horizon…

For full details and eligibility criteria for these winter support schemes please click here.