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Goodbye Furlough Scheme & welcome the Jobs Support Scheme

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Goodbye Furlough Scheme & welcome the Jobs Support Scheme

Outcomes from Chancellor Rishi Sunak’s statement

The Chancellor, Rishi Sunak, announced the introduction of the Job Support Scheme (JSS) to replace the Furlough Scheme when it comes to an end in October. The Chancellor also announced some steps the government is taking to support businesses cash flows which could save businesses and, in turn, save jobs.

As expected, the Furlough Scheme will terminate at the end of October as originally planned. The Furlough Scheme will be replaced by the JSS with the aim of supporting the wages of people in work and giving businesses the option to keep employees on shorter hours rather than make redundancies.

The Chancellor provided three principles that will underpin the Job Support Scheme.

  1. The Scheme will support viable jobs. Employees will need to work at least one third of their hours and be paid for that work as normal by their employer.
  2. All small and medium sized businesses will be eligible for the Scheme. Larger business with a turnover that has fallen through the crisis will also be eligible.
  3. The Scheme will be available to all employers across the UK even if they have not previously used the Furlough Scheme.

Although it was initially unclear what the government contribution would be, some further guidance is provided in the Winter Economy Plan. Specifically, for every hour not worked the employer and the government will each pay one third of the employee’s usual pay, and the government contribution will be capped at £697.92 per month. Also, for an employee to be eligible he or she must not be under notice of redundancy. The guidance (when released) may cover any type of notice.

The Scheme will run for 6 months from 1 November 2020. Employers retaining furloughed staff on shorter hours can claim under both the Furlough Scheme and the Jobs Support Scheme.

Rumour has it that the employee has to be on PAYE on or before 23 September 2020.

Self-employed grant
The existing self-employed grant is said to be extended on similar terms and conditions as the new JSS. Further guidance will undoubtedly be issued in due course.
 

Supporting businesses cash flows
The Chancellor announced four specific steps to support businesses cash flows.

  1. Bounce back loans can be extended up to ten years. Interest only payments can be made, and repayments can be made for up to six months. It has been said businesses credit ratings will not be impacted. 
  2. Regarding the Coronavirus Interruption Loan, the government guarantee will be extended for up to ten years, and the deadline for all loan schemes will be extended until the end of this year. Planning for a successor loan programme is underway, which is scheduled to begin in January 2021.
  3. There will be further flexibility for deferred tax bills. Rather than VAT bills being due in March 2021, businesses can spread tax bills over eleven small payments with no interest to pay.
  4. Hospitality and tourism – VAT rates were to increase from 5% back to the standard 20% in January 2021; this has been extended until March 31st 2021.

We await draft legislation and further guidance as to how the updates today will work in practice.

If you need advice on the above, contact our specialist employment lawyers or sign up to our Wednesday Webinar on 30 September 2020 where Julie Temple, head of BLHR and employment team, will be providing a live update on working from home and the new Job Support Scheme
I can be contacted on 01206 217624 or helena.oxley@birkettlong.co.uk.
 

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