Employees kept in work on reduced hours will have their wages topped-up by the Government in a bid to fend off mass redundancies over the dark winter months, the Chancellor Rishi Sunak has announced.
Sunak yesterday revealed that the Coronavirus Job Retention Scheme will be succeeded by a new Job Support Scheme (JSS) from November.
It means employees working at least one-third of their normal hours will be eligible for the JSS scheme to have their regular pay covered.
Sunak said ending the existing furlough scheme at the end of October remained the right decision. The country has many more months to come in which the public will have to live under heavy restrictions, and the economy will further falter.
“[There has been] no harder choice than the decision to end furlough… but as the economy reopens it is fundamentally wrong to hold people in jobs that only exist inside the furlough,” said the Chancellor, explaining that keeping jobs only destined to go would be the wrong decision.
However, under the new JSS system, the employer will pay their employee for hours worked, and the government and the employer will then each cover one third of wages applicable for the hours the employee is not working.
The sum figured will be based upon the worker’s usual salary but the grant will be capped at £697.92 per month. It will mean employees enrolled in the JSS receive around 77% of their usual salaries.
Sunak said of the move in the Commons: “What I want to be able to do is to provide as much support as possible given the constraints we operate in. We obviously can’t sustain the same level of things that we were doing at the beginning of this crisis.”
JSS will run for six months from the beginning of November, as the existing scheme comes to a climax.
Kate Nicholls, chief executive of UKHospitality, previously warned of a “cliff edge” moment as furlough ended.
She said of Sunak’s new plans: “The announcement of further restrictions yesterday was a significant hammer blow that will inevitably depress trading.
“It was crucial that the chancellor delivered support today that specifically targeted the hospitality sector which has been hit harder than any.
“The announcement of flexible employee support is a move in the right direction, but hospitality needs more targeted efforts to support jobs. Almost one million people in our sector are still on furlough.”