On 24 September 2020 in the House of Commons, Rishi Sunak, the Chancellor of the Exchequer announced the Government’s Winter Economy Plan.
In summary, the current Coronavirus Job Retention Scheme is due to continue until 31 October 2020; and from 1 November 2020, the Government will be initiating a six-month Job Support Scheme (‘the Scheme’).
The Scheme is open to all SMEs and larger businesses. However, larger businesses can only take part if their turnover has fallen through the COVID-19 crisis. Further detail is awaited on how this will be applied. The Scheme can also be accessed by all employees, even if they were not previously furloughed.
Whilst the Government is yet to provide further detail on this, Mr Sunak has verbally announced that the Scheme will involve the following:
- Employees will have to work at least 33% of their normal hours and employers will pay their employees for this time
- For the remaining hours not worked, the Government will contribute 66% of the employee’s salary
In summary, an employee will work 33% of their normal hours and receive at least 99% of their pay, 66% of which will be paid by the Government.
We would note that Mr Sunak’s verbal announcement was unhelpfully contradicted by the HM Treasury’s subsequent announcement. Notably, HM Treasury released a pictogram (as below) suggesting that “for remaining hours not worked, the government and employer pay 1/3 wages each”, but it also proceeds to confirm that the employee will only receive 77% of their pay (suggesting 33% for paid work, 22% Government contributions and further 22% from the employer).
In considering the circumstances, it appears nonsensical for an employer to pay 55% or even two-thirds of an employee’s salary when the employee is only working 33% of their normal hours. It is our view that this is unlikely to encourage employers to consider that the Scheme is an alternative option to redundancy and would go against the spirit in which the Government intended the Scheme to be introduced. We eagerly await the Government’s clarification on this point. No doubt, once we have further guidance, we will ensure that you are updated in due course.