The Government has announced that the furlough scheme will be extended until December following this past weekend’s announcement of a new national lockdown.
The furlough scheme has seen millions of staff members paid up to 80% of their wages where an employer has lost trade and been unable to find enough work for employees.
Intended as a measure to guard against job losses, the scheme was due to be replaced by the Job Support Scheme (JSS) from the start of November.
JSS offered less financial support to business, but the original furlough scheme, which pays up to £2,500 per staff member each month, will now continue.
Will it be different from the original furlough?
While there will be no difference for staff members, the new scheme is actually more generous for employers than it has been in recent months.
The rate payable had dropped to 60%, but it will now return to the original 80% rate.
The Government will pay that amount, with the employer expected to cover pension and national insurance contributions.
Since July, employers have been able to bring back employees part-time, and furlough them for the rest. This will continue.
To be eligible for this extension, employees must have been on the payroll by 30 October, but they don’t need to have been furloughed before.
While the government updates the system, employers will submit their wage claim and be refunded afterwards.
After that, they will be paid upfront to cover the cost.
What else can local businesses claim?
The government will also provide the following support:
- Up to £3,000 per month under the Local Restrictions Support Grant if their premises is forced to close
- £1,000 for every furloughed employee kept on until at least the end of January
- £1,500 for every out-of-work 16-24-year-old given a ”high quality” six-month work placement
- £2,000 for every under-25 apprentice taken on until the end of January, or £1,500 for over-25s
- A grant available to self-employed people affected by coronavirus has also been doubled to 40% of profits, with a maximum grant of £3,750 over a three-month period
What happens when lockdown ends?
The Government has indicated that the scheme will end when lockdown rules are relaxed, which is expected to be in December.
It is believed that the tiered system of lockdown will return at this stage, which will coincide with the introduction of JSS.
Under that scheme, if a business has to close due to local restrictions, workers will be paid 67% of their wages – up to a maximum of £2,083.33 a month.
Employers won’t have to pay towards an employee’s salary.
Firms that can stay open, but only have enough work for employees to return part-time, will also be eligible for help.
Staff will have to be paid by their employer to work a minimum 20% of their hours per month.
The employer must pay an extra 4% of total wages to cover some of the hours not worked, and the Government will pay 49% of the total salary to cover hours not worked.
So, overall the employee would get at least 73% of salary. The maximum contribution the government will make is £1,541.75.
Do you need help understanding the new incentives available for businesses?
Cooper Accounting is working with local businesses to navigate the obstacles posed by Coronavirus.
Get in touch for an informal chat.