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End of Furlough – what happens next?

As the furlough scheme draws to a close on 31 October 2020, employers need to look to the future and consider the new options available to support their businesses, as the pandemic continues with the introduction of new restrictions and no end in sight. Our list below outlines some of the options.

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Published 16 October 2020

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  1. The Job Support Scheme

The Job Support Scheme starts on 1 November 2020, immediately after the furlough scheme ends. The government will step in to partially top up pay for workers who are not needed to work their full contracted hours and are working for at least one third of their usual hours.

The government will pay one third of hours not worked, up to a cap of £697.92 per month, with the employer also contributing a third of hours not worked (not capped). The scheme will last for 6 months and all SMEs are eligible regardless of their financial situation. Larger companies will only be eligible if their revenue has declined during the pandemic. Much like flexible furlough, the scheme allows employees (who were on PAYE on or before 23 September 2020) to opt in and out of the scheme without needing to work the same pattern each month.

The government has recently announced an extension to the Job Support Scheme for businesses required to close entirely due to tighter local or national coronavirus restrictions. For those businesses, the government will pay two thirds of their employees’ wages, subject to a cap of £2,100 per month. Further guidance is expected soon and it appears that this extension could provide a lifeline in a form similar to the furlough scheme albeit with a lower monthly wages cap.

  1. The Job Retention Bonus

The Job Retention Bonus is a one-off payment of £1,000 which the government will give employers for every furloughed employee retained until 31 January 2021. The employee must have been placed on furlough at some point and remain continuously employed up to 31 January 2021 and earn an average of at least £520 per month between 1 November 2020 and 31 January 2021. Employers will be able to claim the Job Retention Bonus after they have filed PAYE for January and payments will be made to employers from February 2021.

  1. The Kickstart Scheme

The Kickstart Scheme offers employers £1,500 for every ‘high quality’ 6-month work placement given to a formerly unemployed 16 – 24-year-old. To be eligible the prospective employee must currently be in receipt of Universal Credit and at risk of long-term unemployment. Funding will cover 100% of the relevant National Minimum Wage for 25 hours per week, the associated employer National Insurance contributions and employer minimum automatic enrolment contributions for each job placement.

  1. Incentivising employers to take on apprentices

Employers are being offered £2,000 for each new under-25-year-old apprentice and £1,000 for every over-25-year-old, they have taken on up to 31 January 2021. This includes apprentices who have previously been made redundant and there is a specific Redundancy Support Service for Apprentices which will facilitate this scheme. Employers interested in recruiting redundant apprentices to take advantage of this scheme should consider signing up to this new government service to advertise positions.

In our view, except for the extension to the Job Support Scheme, these measures may only provide short-term solutions.

Andy Burnham, Mayor of Greater Manchester, is seemingly pushing for greater financial support before accepting that Greater Manchester should be subjected to ‘Tier 3’ restrictions that would require the closure of pubs, bars, casinos and gyms.

Businesses will need to take a commercial and pragmatic view on whether any of the options regarding their employees are actually feasible when considering their longer-term strategy. Inevitably more difficult decisions will need to be taken as winter closes in, regarding the viability of staffing levels, particularly within the hospitality and travel sectors.

If you have any questions about the end of the furlough scheme, the provisions above, redundancies or any other employment related queries then the Collyer Bristow Employment Team is on hand to help.

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Shorter Reads

End of Furlough – what happens next?

As the furlough scheme draws to a close on 31 October 2020, employers need to look to the future and consider the new options available to support their businesses, as the pandemic continues with the introduction of new restrictions and no end in sight. Our list below outlines some of the options.

Published 16 October 2020

Associated sectors / services

  • Employment law for employees
  • Employment law for employers

Authors

  1. The Job Support Scheme

The Job Support Scheme starts on 1 November 2020, immediately after the furlough scheme ends. The government will step in to partially top up pay for workers who are not needed to work their full contracted hours and are working for at least one third of their usual hours.

The government will pay one third of hours not worked, up to a cap of £697.92 per month, with the employer also contributing a third of hours not worked (not capped). The scheme will last for 6 months and all SMEs are eligible regardless of their financial situation. Larger companies will only be eligible if their revenue has declined during the pandemic. Much like flexible furlough, the scheme allows employees (who were on PAYE on or before 23 September 2020) to opt in and out of the scheme without needing to work the same pattern each month.

The government has recently announced an extension to the Job Support Scheme for businesses required to close entirely due to tighter local or national coronavirus restrictions. For those businesses, the government will pay two thirds of their employees’ wages, subject to a cap of £2,100 per month. Further guidance is expected soon and it appears that this extension could provide a lifeline in a form similar to the furlough scheme albeit with a lower monthly wages cap.

  1. The Job Retention Bonus

The Job Retention Bonus is a one-off payment of £1,000 which the government will give employers for every furloughed employee retained until 31 January 2021. The employee must have been placed on furlough at some point and remain continuously employed up to 31 January 2021 and earn an average of at least £520 per month between 1 November 2020 and 31 January 2021. Employers will be able to claim the Job Retention Bonus after they have filed PAYE for January and payments will be made to employers from February 2021.

  1. The Kickstart Scheme

The Kickstart Scheme offers employers £1,500 for every ‘high quality’ 6-month work placement given to a formerly unemployed 16 – 24-year-old. To be eligible the prospective employee must currently be in receipt of Universal Credit and at risk of long-term unemployment. Funding will cover 100% of the relevant National Minimum Wage for 25 hours per week, the associated employer National Insurance contributions and employer minimum automatic enrolment contributions for each job placement.

  1. Incentivising employers to take on apprentices

Employers are being offered £2,000 for each new under-25-year-old apprentice and £1,000 for every over-25-year-old, they have taken on up to 31 January 2021. This includes apprentices who have previously been made redundant and there is a specific Redundancy Support Service for Apprentices which will facilitate this scheme. Employers interested in recruiting redundant apprentices to take advantage of this scheme should consider signing up to this new government service to advertise positions.

In our view, except for the extension to the Job Support Scheme, these measures may only provide short-term solutions.

Andy Burnham, Mayor of Greater Manchester, is seemingly pushing for greater financial support before accepting that Greater Manchester should be subjected to ‘Tier 3’ restrictions that would require the closure of pubs, bars, casinos and gyms.

Businesses will need to take a commercial and pragmatic view on whether any of the options regarding their employees are actually feasible when considering their longer-term strategy. Inevitably more difficult decisions will need to be taken as winter closes in, regarding the viability of staffing levels, particularly within the hospitality and travel sectors.

If you have any questions about the end of the furlough scheme, the provisions above, redundancies or any other employment related queries then the Collyer Bristow Employment Team is on hand to help.

Associated sectors / services

  • Employment law for employees
  • Employment law for employers

Authors

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