The End of Furlough

The furlough scheme ends on October 31st. Halloween is, perhaps, a fitting date for this. Many furloughed staff will be feeling frightened and anxious as the date approaches.

The good news is that there will be additional support for businesses and their employees. While furlough will end, the Chancellor has announced a new package of support measures. These measures for business include an extension of the repayment period for business loans, an extension to the VAT reduction and the job support scheme.

What has changed?

From the 1st of November, the furlough scheme will be replaced by the Job Support Scheme.

Under the new scheme, employees who are eligible will have a percentage of their wages subsidised by the government. Looking at the Chancellor’s policy, if a job role still exists but regular full time hours are impacted by reduced demand, as long as the employee can work 33% of their usual hours they will be eligible if they work for and SME or for a larger organisation that can prove it has been adversely affected by Covid 19.

In the instance where an employee works 33% of their normal full-time hours, they should be able to receive 77% of their base salary. The difference will be made up through equal contributions from the employer and the government for the hours not worked. Therefore, the employer would pay 33% of the hours not worked and the government would pay the other 33%.

What will happen to those who are not transferred to the new scheme?

The policy has already seen a high level of criticism. This is because it will not protect all furloughed staff. When questioned about this, the Chancellor said that he wanted to ensure he was protecting jobs which still exist. The result of this is going to be further redundancies come Halloween.

Companies will not be able to use the scheme for staff to whom they have already given notice of redundancy. Furthermore, the employer will not be allowed to make staff redundant while they are on the scheme. Since the employer carries the larger pay burden, some publications are arguing that employers will think themselves better off making redundancies rather than using the scheme.

Is the scheme only open to currently furloughed staff?

No. But the decision to open the scheme to companies who have not used the previous furlough scheme may also indicate that the chancellor expects worse economic hits to come.

We will keep an eye on this in the lead up to November 1st and beyond. While we expect it to be welcome news for many, it will be interesting to see if any additional support will be introduced. Opposition parties are currently pushing the government to develop job creation and training schemes.