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Replacement for Furlough Scheme

The Government has, in recent weeks, been subject to vigorous lobbying within Parliament from politicians of all parties and outwith Parliament from external interested parties. The message from those lobbying has been that there is a significant risk of large numbers of employees being made redundant should the present Job Retention Scheme come to an end as scheduled in October.

Acas, CBI and other trade unions have been lobbying the Government to take action to address the risk by putting in place a system to extend financial assistance to employees and employers.

The Government response, announced today by Chancellor Rishi Sunak, is that the Job Retention Scheme will come to an end, as planned, on 31 October 2020 and a new support measure introduced with effect from 1st November.

Jobs Support Scheme

The new Jobs Support Scheme will involve the Government supporting the wages of people who are in work but are working fewer than normal hours due to decreased demand. The Scheme will give employers the option to keep people in work on shorter hours, rather than make them redundant.

The Scheme will be open to businesses across the UK even if they have not previously used the furlough scheme, with further guidance being published in due course. SME businesses are entitled to make use of the Scheme. Larger employers will be eligible on condition that their turnover has fallen during the Covid-19 pandemic. There are also limitations on use of the Scheme relating to level of dividend payments to shareholders.

The Treasury website states that employers will continue to pay the wages of staff for the hours they work and that employees must be working at least 33% of their usual hours. The Government and employer will each pay one third of the employee’s equivalent salary. This means employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they can’t work.

Extension of Self Employment Support Scheme  

The good news for self-employed workers is that the Government is continuing its support for self-employed individuals by extending the Self Employment Income Support Scheme Grant (SEISS). An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.

An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April.

If you would like further information regarding the new Scheme, please contact:

Stuart Robertson by email: srobertson@gilsongray.co.uk or by phone: 07793 821  523 / 0141 433 7752

Graham Millar by email: gmillar@gilsongray.co.uk or by phone: 07841 920 102 / 0141 530 2023

You can also visit our Employment Law Team page by clicking here

The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray.

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