A new emergency job saving scheme will replace furlough - here’s how it will work

The Chancellor has unveiled a new emergency job saving scheme, confirming that the current furlough scheme will come to an end this October. 

Rishi Sunak said that the primary economic goal of the incumbent government was to save jobs, but that the way this is achieved must "evolve.” He said that it would be “fundamentally wrong” to keep people in jobs that only exist inside the furlough scheme, adding that the new scheme’s aim was to save “viable” jobs. 

The new scheme will see the government top up the wages of people working at least a third of their normal hours.

The Chancellor also confirmed that a cut to VAT for hospitality businesses will stay in place until at least 31 March 2021.

How does the new jobs scheme work and who is eligible? 

The aim of the new scheme is to keep workers in jobs within industries which will see a decline in operations during the winter months, while also encouraging the return of furloughed staff.

Mr Sunak explained, “The scheme will support viable jobs so employees must be working at least a third of their normal hours and be paid for that work, as normal, by their employer.”

Employers are expected to cover the hours that their employees do work. On top of that, the government will split the cost with employers to cover two thirds of the hours they have lost by reducing their working hours, up to a cap of 77 per cent of their original wage.

For example if an employee works 33 per cent of their usual work pattern, the government and employer would pay an additional 22 per cent each of the employees usual wage. 

The scheme will be in place from 1 November 2020 to April 2021.

Who is eligible for the job support scheme? 

All small and medium sized businesses are eligible to apply for the scheme, even those who didn’t utilise the government’s original furlough scheme.